IREN falls 63% in a year despite AI cloud revenue surge

IREN's situation sits at the intersection of two pressures. On one side, the business is growing: AI Cloud revenue nearly tripled to $200 million in the quarter reported Nov. 5, and backlog reached $20.3 billion. On the other, the cost of building that capacity has repeatedly outrun operating cash flow, and stock has filled much of the gap — the diluted share count rose from 40.9 million in fiscal 2022 to 316 million in fiscal 2026, nearly eight times the 2022 count, before IREN issued another 12.6 million shares to buy Mirantis. That dilution history is the backdrop against which the current $6 billion funding gap should be read.

The stock's weakness is also tied to its two anchor customers becoming more careful. Microsoft's capex fell short of expectations on Oct. 28, and Bloomberg reported Nov. 5 that Microsoft is tightening oversight of some IREN projects; the Microsoft-requested network reconfiguration pushed the $4 billion run-rate target to January or February. Nvidia, which signed a five-year, $3.4 billion contract in May and can buy up to 30 million IREN shares at $70, announced Jensen Huang's resignation on Nov. 12, and The Information reported Nvidia is expected to slow its investing in AI companies. The signed contract should hold, but selling 2027 capacity may get harder.

Management's counter-argument, per co-CEO Daniel Roberts, is that IREN owns the land, power, and data centers, which carry no debt and give it more ways to fund growth. Management counts $12 billion to $15 billion of possible loans and prepayments ahead of convertibles or new shares. With $20.3 billion of backlog, the current 2.4x forward sales multiple — less than half the 3-year average — looks premature to sell into, but waiting for IREN to raise most of the $6 billion with loans before buying more is the more prudent path.