The AI Power Crisis: Is IREN Stock The Grid Bottleneck Winner?
The global race for Artificial Intelligence has hit a critical structural wall: electricity. There simply isn’t enough electricity to power the aggressive compute build out. Morgan Stanley projects a U.S. power shortfall through 2028 of 44 gigawatts (GW). Securing power capacity has become the primary industry bottleneck. New data centers, even those with cutting-edge chips, are facing multi-year delays for essential grid connections. This is where IREN stock (NASDAQ: IREN), one of the largest publicly traded Bitcoin miners which pivoted toward AI cloud compute, has established its structural advantage. Benefiting from years of prescient power planning, IREN has pivoted to become the critical infrastructure partner to the world’s biggest technology companies. The company has been one of 2025’s hottest stocks, soaring over four-fold year-to-date to around $47. Separately, see What The Trump “China Pivot” Means For Nvidia.
How IREN Differentiates Itself
IREN’s competitive advantage is not software or core technology. It is the industrial assets that address the industry’s biggest constraint head-on. This vertical integration is widely recognized by analysts and investors as IREN’s core moat.
- Total Vertical Control: Unlike rivals who need to lease power or data center space, IREN owns its land, energy sources, and data centers across North America outright.
- The Power Pipeline: This complete ownership allows IREN to control approximately 2.9 to 3 GW of secured, low-cost power capacity – a resource so scarce it allows for rapid scaling where rivals face multi-year delays.
- Industry-Leading Low Costs: This integration translates to some of the lowest power costs among peers, at roughly U.S. $0.033 per kWh. This difference provides a massive structural advantage, driving high gross margins on compute sales.
- Renewable Energy Advantage: All operations are powered entirely by renewable energy, sourced from British Columbia hydropower in Canada and wind-heavy markets in Texas. This is a non-negotiable requirement for global hyperscale partners.
Selling Compute-as-a-Service
The company’s strategy is to avoid the complexities of general cloud services and focus purely on providing high-density, specialized hardware hosting or Infrastructure-as-a-Service (IaaS). While key customers include neocloud companies like Fluidstack and Together AI, the crown jewel of this business is the $9.7 billion partnership with Microsoft, which was announced in October 2025. This deal grants the tech giant dedicated access to IREN’s high-end Nvidia GB300 GPUs through 2031. The deal is expected to contribute about $1.9 billion in expected annual revenues. The company expects to execute this via phased deployments at its Childress Texas facility.
This IaaS model allows partners like Microsoft to avoid tying up capital building new data centers and securing expensive power infrastructure. It also guarantees supply by locking in access to scarce GPUs and the liquid-cooled facilities needed to run them. It also leverages IREN’s ready-made power infrastructure to deploy tens of thousands of GPUs in months, not years.
Does The Valuation Make Sense?
The stock trades at a clear premium, around 47x estimated FY’26 earnings, reflecting its blistering pace of expansion. Revenues have surged 235% from $206 million to $689 million over the last 12 months, while quarterly revenues jumped 355.4% to $240 million in the most recent quarter from just $53 million a year ago. Adjusted EBITDA margins came in at a strong 54% last year. Growth is also likely to remain strong going forward. Management now forecasts reaching a sizable $3.4 billion in AI Cloud Annualized Recurring Revenue (ARR) by the end of 2026, reinforcing the market’s growth expectations.
On capacity, the company is pursuing an aggressive GPU expansion strategy, scaling from roughly 23,000 operational GPUs today to approximately 140,000 GPUs by the end of 2026. To fund this rapid $5.8 billion build-out, it successfully closed a $2.3 billion convertible note and equity offering in early December 2025.
What Are The Risks?
That said, the key risk is execution. While the contracts and capital are secured, the company must flawlessly manage the large-scale construction, cooling, and network integration of more than 100,000 GPUs, a process inherently vulnerable to multi-month delays and technical bottlenecks.
The stock has also been a pretty volatile one given the surging interest from retail investors (the “Reddit crowd”); while it was up over 6x between January and November on momentum-driven buying and social-media hype around AI infrastructure plays, it has since declined about 39% since then. The stock’s heavy activity on online messaging boards and forums makes it quite vulnerable to sharp, sentiment-driven swings, where price can detach quickly from fundamentals on both the upside and the downside.
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