Why Iren Stock Soared Today
Key Points
Iren's AI cloud revenue nearly tripled.
Price hikes are helping the data center builder progress toward profitability.
- 10 stocks we like better than Iren ›
Shares of Iren (NASDAQ:IREN) spiked 20% on Friday after the neocloud operator highlighted its robust artificial intelligence (AI)-fueled growth.
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Rapid AI-driven expansion
Iren's revenue jumped 66% sequentially to $228 million in its fiscal 2027 first quarter, which ended on Sept. 30. The gains were propelled by a 182% surge in AI cloud revenue to $200 million.
Iren develops data centers that house the advanced computing infrastructure required for AI model training and inference workloads. It has already secured over 30,000 acres of land and 5 gigawatts (GW) of power to support its 35GW project pipeline.
Rising demand for AI compute is enabling Iren to command higher prices for its offerings. The company said contracted pricing for 3-year and 5-year deals were up 11% and 12%, respectively.
All told, Iren's net loss narrowed to $263 million from $684 million in the prior quarter.
The company's earnings before interest, taxes, depreciation, and amortization (EBITDA) also improved to $66 million from $19 million.
Backed by AI leaders
With its revenue backlog expanding 22% sequentially to $20.3 billion, the cloud platform provider projects capital expenditures of $15 billion in fiscal 2027 to help it satisfy the rapidly growing demand for its AI computing resources.
To assuage investors' fears about the reliability of this demand and the capital required to meet it, Iren noted that two-thirds of its revenue backlog was from investment-grade companies, including industry titans Nvidia and Microsoft. Iren also said its customers frequently agree to make upfront payments for AI chips.
"We are being deliberate about how we grow, contracts with customers who renew, returns that justify the capital, and the financing attached to each deployment," Co-CEO Daniel Roberts said during a conference call with analysts.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft and Nvidia. The Motley Fool has a disclosure policy.
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