Why Iren Stock Just Got a Double Upgrade to Buy

Iren has shifted its business focus to selling AI computing power from Bitcoin. (Dreamstime)

Key Points

• J.P. Morgan analyst Richard Choe double upgrades Iren to Overweight from Underweight and raises his price target to $65 from $46.
• Choe writes that Iren has turned itself into a top-tier neocloud provider, noting its customer momentum and strategic partnership with Nvidia.
• Iren sees its revenue from artificial-intelligence cloud services grow 110% sequentially in the fiscal fourth quarter.

Iren stock was double upgraded on Monday as the emerging so-called neocloud, which has shifted its focus to selling artificial-intelligence computing power from Bitcoin , continues to see momentum in its business shift.

Iren stock fell 4.4% to $41.98 in premarket trading on Monday after ending Friday up 0.4%. Shares have risen 18% this month.

J.P. Morgan analyst Richard Choe double upgraded Iren to Overweight from Underweight and raised his price target to $65 from $46. That price target represented 48% upside from the closing price of $43.83 from Friday.

The bullish upgrade, however, didn’t result in a positive reaction for the stock as the AI-trade came under pressure after Elon Musk, OpenAI CEO Sam Altman, and Anthropic CEO Dario Amodei all called for a slowdown in the pace at which AI is developing.

Chip makers Intel and Advanced Micro Devices fell 6.9% and 5.7%, respectively. Marvell Technology stock also declined 8% while Micron Technology dropped 6%. Coherent, Corning, and Lumentum were each down more than 7%.

Choe wrote that Iren has turned itself into “top tier” neocloud provider, a space pioneered by CoreWeave . The firm noted that Iren has seen momentum with adding customers and that its strategic partnership with Nvidia has added legitimacy to the company which saw revenue from AI cloud services grow 110% sequentially in the fiscal fourth quarter.

Wall Street expects Iren to bring its Bitcoin mining operations completely offline by the end of the decade as the company completes the shift from energy intensive cryptocurrency mining to AI cloud computing.

J.P. Morgan added that industry pricing has made the neocloud business more attractive. Contracts have increased to $15 to $20 per watt from $10 to $15 per watt could continue to move higher based on graphic processing unit, or GPU, procurement and the duration of the contract, according to the firm.

Another positive for Iren is that its largest contract announcements have been with Nvidia and Microsoft. Iren has also ratcheted up dealmaking with other large language model, or LLM, AI companies.

The fact that Iren also owns its own data centers is also a “competitive advantage” in managing costs, according to Choe.

Of course, this is dependent on whether the massive AI buildout continues at it current pace. Even with the warnings from Anthropic, OpenAI, and Musk, Wall Street has a bullish view on Iren.

Of the 17 firms polled by FactSet, Iren stock has an average Buy rating with a price target of $81.43.

Write to Kit Norton at kit.norton@barrons.com

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