IREN's stock slumps as its AI pivot can't come fast enough
With bitcoin suffering its worst loss since the collapse of Sam Bankman-Fried's FTX crypto change in 2022, nearly every token and crypto-related stock went down with it.
After coming close to falling below $60,000 on Thursday for the first time since October 2024, BTC rallied as much as 11.4% on Friday to rise above $70,000 again.
But the carnage in digital assets will likely weigh on sector stocks until investors can be convinced that the small rally at the end of last week is sustainable.
For bitcoin miner IREN Ltd. (IREN), the downturn in the crypto space is overshadowing the progress it's making in its pivot to AI cloud services as it pushes to diversify its revenue beyond cryptocurrencies.
The company's shares fell as much as 24% on Thursday and then slid another 5% in early morning trading on Friday before rallying with the rest of the market later in the day to close up 5.1%.
The stock has slumped 22.2% over the past five trading sessions, but it has gained 10.8% on the year so far.
IREN was not helped by last week's earnings for the second quarter of FY2026, even though there were bright spots.
The company reported a net loss of $155.4 million due in part to declining revenue from its bitcoin mining, as well as hardware expenses related to its AI cloud services transition.
IREN posted a flat earnings per share (EPS), which beat analyst estimates for a 3-cent loss. But its revenue of $184.7 million badly missed Wall Street's expectations of $226.9 million.
The company did, however, report that it has secured $3.6 billion in GPU financing from its $9.7 billion multi-year contract with Microsoft (MSFT) and has expanded its data center capacity in Oklahoma by 1.6GW, bringing its total capacity to more than 4.5GW.
“With capital access now demonstrated at scale, we can engage customers with greater flexibility while maintaining pricing discipline," IREN co-founder and co-CEO Daniel Roberts said during the earnings call.
He added that the company is "at an early stage of monetization relative to our platform size."
Despite its recent stock slide, Wall Street remains bullish on IREN's AI pivot.
In a client note on Friday, Compass Point analyst Michael Donavan reiterated a Buy rating and maintained his price target of $105, citing "high confidence in IREN's execution and alignment with hyperscaler AI capex wave."
Donavan noted that the company has a "larger secured power base, clearer capital structure, and a demand pipeline that appears increasingly actionable."
He added that he sees "future large contracts as inevitable, not speculative."
Meanwhile, Citizens analyst Greg Miller reiterated his Market Outperform rating for IREN's shares and maintained an $80 price target. Echoing Donavan's sentiments, he said that he sees a "clear execution path with profitable contracts and scalable infrastructure."