IREN (NASDAQ: IREN) shares climbed more than 4% to $43.25 on Tuesday, joining a broader rally among neocloud providers such as CoreWeave and Nebius after Nvidia delivered better-than-expected quarterly results and raised its forward guidance. The upbeat sentiment, however, will be tested when IREN publishes its own financial results later today.
Revenue expected to drop on Bitcoin weakness
IREN, formerly known as Iris Energy, is scheduled to report its fiscal fourth-quarter earnings after the market close on August 27. Analysts surveyed by Yahoo Finance project revenue of $135 million, a 28% decline year-over-year. The most optimistic forecast sits at $185 million, still below the $188 million reported in the same period last year.
The anticipated drop is largely attributed to Bitcoin's extended bear market during the quarter, which reduced the value of the coins IREN mines. While the company has pivoted toward AI cloud services, Bitcoin mining still accounts for the majority of its revenue. Bitcoin has since recovered, trading around $80,200, up from a year-to-date low of $57,300, which could provide some tailwind in the coming quarters.
AI expansion and strategic deals
IREN has made notable progress in its AI transformation. The company recently completed the acquisition of Mirantis, a move aimed at enhancing its ability to manage AI workloads. It also secured a $2.8 billion deal with several AI labs, boosting its revenue backlog. As part of that agreement, IREN raised its AI Cloud annualized run-rate revenue target to $4 billion, up from $3.7 billion previously.
CEO Daniel Roberts highlighted the scaling of the company's vertically integrated AI Cloud platform, noting expansion from approximately 3 MW of self-built capacity to 480 MW being delivered this year, with a target of 1.2 GW by 2027. The customer base now spans hyperscalers, enterprises, and AI developers.
Nvidia's results and AI demand
Nvidia's earnings report this week provided a strong signal for the AI infrastructure sector. The chipmaker reported revenue of $96 billion, exceeding the expected $92 billion, and guided to 70% growth in fiscal 2028. The robust outlook suggests sustained demand for computing power, which bodes well for IREN and its peers. In a related development, Anthropic struck a $46 billion deal with Nscale, a competitor, underscoring the intense demand for AI compute capacity.
However, IREN faces potential capital needs. The company may need to raise additional funds to support its aggressive expansion, similar to competitors like CoreWeave and Nebius, which have recently secured substantial financing.
Technical outlook: mixed signals
From a technical perspective, IREN stock has been in a downtrend since June, falling from a high of $70.58 to around $40. The shares have slipped below the 200-day moving average, indicating bearish momentum. On the positive side, the stock has held above the key support level of $33.34, and the Supertrend indicator has turned bullish. Traders will likely watch the $33.35 support and $50 resistance levels following the earnings release.
Investors will also be monitoring broader AI-related news, such as Nvidia's recent earnings beat and its implications for the sector. Additionally, memory supply constraints flagged by Nvidia could affect the cost structure for AI infrastructure providers.
As IREN reports its results, the market will assess whether the company can balance its Bitcoin mining legacy with its AI ambitions, and whether its growth trajectory justifies the current valuation.
This article is for informational purposes only and does not constitute financial advice.
