IREN's share price has extended its decline, reaching its lowest point since August, as the broader selloff in neocloud and AI-related stocks intensifies. The stock recently traded at $21.75, a stark contrast to its 2025 high of $76.63, as investors brace for the company's upcoming earnings report.
Neocloud sector under pressure
The neocloud sector is experiencing a significant downturn, even as major indices like the S&P 500 and Nasdaq 100 have rallied following the midterm elections. CoreWeave, the largest player in the space, saw its shares drop nearly 10%, while Nebius fell to $141, its lowest level since May. Other companies including Riot Platforms, HIVE Digital, MARA Holdings, and Cipher Digital also suffered double-digit percentage losses. Even semiconductor giants like Nvidia, AMD, and Marvell Technology were not spared.
Investor sentiment has been dampened by concerns over a potential Democratic sweep, which could lead to increased regulatory scrutiny of AI and data center industries. Additionally, fears of an AI bubble persist, with some analysts warning that rising interest rates could trigger a correction.
Recent economic data added to the unease. A report showed that the private sector added 86,000 jobs last month, exceeding the expected 67,000, which may prompt the Federal Reserve to raise rates at its December meeting.
Adding to the sector's woes, a Gartner report cautioned that many neocloud companies may need to record substantial impairments in the coming years. The report highlighted that AI data center owners would need to generate $8.5 trillion in revenue by 2030, while total enterprise and consumer revenue in the AI space is projected to be less than $3.6 trillion.
Earnings report as a key catalyst
The next major test for IREN shares is the upcoming earnings report, which will provide crucial insights into its business performance. In its last quarterly report, revenue declined to $137.2 million, with AI cloud services revenue rising to $70.2 million while Bitcoin mining revenue fell to $66.7 million.
Analysts expect the upcoming report to show a 9.13% drop in revenue to $221 million. For the current fiscal year, guidance is projected at $2.81 billion, a 297% increase from the prior year, with further growth to $7.41 billion expected next year.
Investors will also be looking for updates on customer diversification. IREN currently relies heavily on a single anchor client that has committed to pay $9.3 billion. Unlike last year, when the company announced $2.8 billion in agreements with firms like Cohere and Figure AI, no major new deals have been disclosed this year.
Technical analysis signals further downside
From a technical perspective, IREN's stock has formed a head-and-shoulders pattern, a widely recognized bearish indicator. The shares have already broken below the neckline support at $33.34 and the 61.8% Fibonacci retracement level of $33.3. The stock remains below the Supertrend indicator, suggesting that the path of least resistance is lower, with the next potential support at the psychological $20 level.
This article is for informational purposes only and does not constitute financial advice.
