$IREN Ltd(IREN)$ is the most hated AI stock right now.
I think it's one of the most undervalued.
AI Cloud +182% Q/Q, $20B backlog, 5GW+ of power.
Here is my $IREN Investment Thesis:🧵
1/ What does $IREN do?
Iren owns every layer of an AI cloud:
- GPUs it rents to AI labs and big tech
- Data centers it built itself
- 30,000+ acres of land and 5GW+ of power
The Roberts brothers founded it in 2018, and Daniel Roberts is still Co-CEO.
Iren slide: three businesses, AI cloud, data centers, land and power
2/ It owns the ground
Most AI clouds rent their buildings.
$IREN owns them.
- $6B of data centers with no debt
- No long-term leases
- 5GW+ of secured power
I think owned land and power are the scarcest assets in AI.
Iren slide: 30,000+ acres and 5GW+ of secured power
3/ Speed
Horizon 1 went from empty field to a 19,000-GPU cluster in 14 months!
The industry needs 18 months for the building alone.
Iren slide: Horizon 1 built in 14 months, aerial photos
4/ Validated by Nvidia
$NVIDIA(NVDA)$ gave $IREN Exemplar Cloud status twice, for B300 and GB300.
Customers include Microsoft, Nvidia, a leading frontier AI lab, Perplexity and Cohere.
After the quarter, that lab agreed to double its capacity.
Iren slide: Nvidia Exemplar Cloud and customer logos
5/ Backlog hit $20B
+22% Q/Q.
- Microsoft: $9.6B
- Nvidia: $3.4B
- Others: $7.2B
Two-thirds is with investment-grade customers.
Iren revenue backlog of $20B by customer
6/ AI Cloud is exploding
A year ago: $7M of revenue on 3 MW.
This quarter: $200M on 93 MW.
28x in 12 months!
Iren AI Cloud revenue by quarter
7/ ARR is about to 4x
$1B of operating ARR at the end of September.
$4B+ targeted for January, possibly February.
All of it is already contracted and funded.
Iren operating ARR ramp to more than $4B
8/ Capacity
- 93 MW today
- 0.3GW by January
- 0.8GW by the end of 2027
The first 0.3GW is fully funded. GPUs for the next 0.3GW are already bought.
Iren data center capacity path to 0.8GW
9/ Going global 🌍
Beyond 2027, work has started on 7 more projects, from Texas and Canada to Spain and Australia.
Iren slide: next growth phase projects
10/ Prices are going UP
Revenue per MW a year:
- Microsoft, 2025: $9.7M
- 5-year, this quarter: $17M
- 3-year, this quarter: $19M-$23M
- 5-year, after the quarter: $22M
- Short-term: $40M+
The same megawatt now earns up to 4x more.
Chart: Iren revenue per IT MW by contract
11/ Old GPUs are earning MORE
$IREN just re-rented old H100s at double the price.
GPU rental prices rose for every generation this year. B300: $7.61 an hour. H100: $2.84.
Iren slide: GPU rental prices rising across generations
12/ Unbelievable growth
Quarterly AI Cloud revenue:
$0.6M ➡️ $200M in 2.5 years! 🤯
That's 350x.
Iren quarterly AI Cloud revenue chart
13/ Margins
- AI Cloud gross margin: 86%
- Adj. EBITDA margin: 29%, from 14% last quarter
Owning the buildings means $IREN pays no rent.
Iren Q1 FY27 highlights slide
14/ Customers pay upfront
At $20M per MW a year, the GPUs pay back in 2.4 years.
If the customer prepays 90%, payback drops to 0.4 years.
One customer just signed that deal at $22M per MW.
Iren slide: illustrative contract economics and payback
15/ Funding
- $9B of cash, committed GPU loans and prepayments
- $6B of data centers with no debt
- $12-15B of funding capacity before converts or equity
The Co-CEO said: "we're not going to grow at all costs."
Iren slide: FY27 funding sources
16/ Analyst estimates
Revenue, fiscal years ending in June:
- 2026: $707M
- 2027E: $2.4B
- 2028E: $7.2B
- 2029E: $14.8B
21x in 3 years.
Iren revenue analyst estimates chart
17/ Simplified valuation model
- 2030 capacity: 3GW
- ARR per MW: $17M
- 2030 revenue: $51B
- Net margin: 11%
- Net income: $5.6B
- Shares: 621M
- EPS: $9.04
P/E of 20-30: $181-$271, +767% to +1,201% upside
P/E of 30-40: $271-$361, +1,201% to +1,635% upside
From the Nov 11 close of $20.84.
Simplified Iren valuation model for 2030
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