Why Did Iren Stock Plunge but Then Recover This Week?
Key Points
Iren is one of several artificial intelligence infrastructure stocks that rose quickly on faith that AI spending will continue to soar.
Signs of a bubble in that sector had investors selling earlier this week.
A strong earnings report from a tech bellwether reversed market sentiment on Friday.
- 10 stocks we like better than Iren ›
Multibillion-dollar deals continue to be announced to add data center compute power for artificial intelligence (AI) applications. Yet some investors are skeptical that a bubble may be forming with AI stocks.
One name that is caught up in the bubble talk is Iren (NASDAQ: IREN). Iren shares plunged as much as 14% at the low for the week. A recovery on Thursday and Friday helped pare that drop. As of Friday morning, Iren stock was actually up by about 2% for the week, according to data provided by S&P Global Market Intelligence.
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AI bubble or no AI bubble?
A strong 10% rebound on Friday helped wipe out much of the week's losses for Iren stock. The roller-coaster ride came as investors began to feel that some AI infrastructure stocks rose too far, too fast. That led to what many felt was a deflating bubble. Once that sentiment hits Wall Street, many investors want to sell quickly to get ahead of a stock market bubble bursting.
Two things changed that thinking. A strong earnings report from tech giant Intel on Thursday gave investors confidence that the market for semiconductor chips was still hot. And a softer-than-expected inflation report on Friday meant there was a better chance that the Federal Reserve would continue on an interest rate-cut cycle.
Lower borrowing costs will help the booming data center buildout continue. That's good news for Iren, as it will gain customers to utilize its AI infrastructure.
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Howard Smith has positions in Intel and has the following options: short November 2025 $26 calls on Intel. The Motley Fool has positions in and recommends Intel. The Motley Fool recommends the following options: short November 2025 $21 puts on Intel. The Motley Fool has a disclosure policy.
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