Key Points
- IREN's previously announced AI lab contract has gained attention following an unconfirmed report linking the customer to Anthropic.
- Long-term agreements with Microsoft, NVIDIA, and other AI customers support IREN's expansion into AI cloud services.
- The company has secured substantial GPU financing, but construction timelines, customer concentration, and rising debt remain risks.
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IREN Limited (NASDAQ: IREN) drew market attention with its Q2 earnings release, prominently announcing a new multi-year deal with a frontier hyperscale AI lab. The news was compounded by an as-yet unconfirmed report that the customer may be Anthropic. Regardless, it is potentially game-changing news for the company, validating the shift from cryptocurrency mining to AI, and putting in place another long-term contract that improves revenue visibility.
The question is what it means for the stock’s price, and the implications could be substantial. Hyperscale deals with leading frontier labs that provide greater visibility into future operations, validating the AI buildout industry-wide, but, more importantly, this company’s cash flow and future profitability.
Among the questions answered is who will pay for IREN's capacity, and how. Assuming the contract is with Anthropic, Anthropic’s revenue run rate topped $65 billion as of July, up from $47 billion in May, underpinned by enterprise demand. Reported projections suggest Anthropic could generate roughly $190 billion to $200 billion in annual revenue by 2028. The question it doesn’t answer is whether Anthropic can monetize the capacity and sustain the contract longer term, providing value to its and IREN’s investors over time.
IREN Aggressively Expands Its Data Center Business
IREN is aggressively expanding its data center business, having decommissioned cryptocurrency capacity sooner than expected to shift it to AI. The impact on results was tangible, leading to wider-than-expected losses, but it accelerated the timeline to monetize the backlog.
As it stands, the company is targeting approximately 300MW of AI IT capacity by year-end and about 800MW by the end of 2027. Looking ahead, IREN has secured 5 GW of power across North America, Europe, and the Asia-Pacific regions, with additional AI infrastructure projects under construction and in development. Not all of that future capacity is covered by long-term contracts. Customer concentration risk remains, with most of the backlog tied to Microsoft (NASDAQ: MSFT), but the portfolio is growing.
IREN’s announced AI cloud contracts exceed $13 billion in total value, underpinned by a $9.7 billion five-year contract with Microsoft. Microsoft booked 200MW of capacity over four installments, the first of which was delivered in August. It, along with other contracts with AI developers, brought contracted annualized run-rate revenue to $4 billion for planned 2026 capacity, compared with $1 billion in operating annualized revenue as of late August. Much of the associated GPU spending is covered by committed financing and customer prepayments.
IREN’s outlook is also less risky, to some extent, because of its project funding, which includes upfront payments and innovative financing that help limit the need for dilutive funding. Microsoft agreed to pay 20% upfront to finance GPU capacity, while newer contracts include customer prepayments covering approximately 45% to 55% of GPU costs, with additional financing provided by private creditors. The Microsoft deal includes debt and upfront payments that total about 96% of the build, while the newer contracts are even more favorable. In some cases, financing and prepayments exceed the associated GPU costs.
IREN Buys Growth, Expands Capacity in Spain
IREN isn’t just building data centers; it's buying growth as it accelerates its AI infrastructure business. Recent additions include Spain’s Nostrum Group and Mirantis Inc., providing an entry into the European Union (EU) and shifting its business from infrastructure provider to full-stack AI factory original equipment manufacturer (OEM). Nostrum Group, notably, is the Spanish version of IREN, building eco-friendly data centers and power solutions, while Mirantis Inc. provides what it calls a “metal to models” platform that can automate data center operations from initialization to model training and deployment.
And if there was ever any doubt about the seriousness of IREN’s build-out plans, investors need only look to the NVIDIA (NASDAQ: NVDA) partnership. Announced in May 2026, the deal aims to accelerate the deployment of up to 5 GW of NVIDIA-based capacity, with a focus on IREN’s 2 GW Sweetwater, Texas, facility. The partnership also includes a $3.4 billion contract for IREN to provide AI cloud capacity for NVIDIA’s own internal workloads.
The next catalyst is the upcoming earnings report, expected in early November. Analysts are hopeful, but a hurdle remains: they forecast a year-over-year revenue decline tied to the decommissioned cryptocurrency business. Investors should focus on details such as new capacity, updates on its timing, new contracts, and balance sheet health. The balance sheet boasts significant growth and ample liquidity, offset by rapidly increasing debt. The good news is that the business is on track to pay it back, but it will take time, and that is the risk for investors. The company is on track to ramp up capacity, but the big jumps won’t happen until next year and 2028, a long time to wait.
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