IREN Adds $2.8B in New AI Contracts, Targeting $4B ARR

IREN Limited shares maintained a "Buy" rating with a price target of $80, according to a BTIG research report released Thursday.

IREN shares moved lower on Friday after the company reported fourth-quarter financial results that missed expectations.

New AI Contracts Bolster Growth Outlook

The BTIG report followed IREN's fiscal 2026 fourth-quarter earnings, which showed adjusted EBITDA of approximately $19 million, below BTIG's estimate of $35 million, while revenue came in at approximately $137 million, above BTIG's estimate of $132 million.

BTIG attributed part of the earnings shortfall to weaker bitcoin prices and noted that IREN continues to scale back its bitcoin mining operations. Analysts highlighted a new multi-year agreement with a frontier AI lab, adding to the previously announced AI cloud contracts totaling approximately $2.8 billion.

This has pushed IREN's 2026 annual recurring revenue target to approximately $4 billion, up from the roughly $1 billion currently being generated.

Capacity Nearly Sold Out

BTIG noted that IREN's 2026 capacity is nearly sold out, with management reporting progress on 2027 and 2028 capacity. Analysts expect additional multi-year contracts of three to five years to be signed at higher pricing levels.

Management guided fiscal 2027 capital expenditures in the range of $25 billion to $30 billion, which BTIG said represents a significant increase from prior figures, aimed at supporting the $4 billion ARR target.

Customer Prepayments Fund Capacity Expansion

BTIG noted that IREN held approximately $5.9 billion in unrestricted cash and $1.7 billion in restricted cash at quarter-end, with the latter primarily designated for Microsoft-related capacity deployment.

The company's liquidity is supported by approximately $3.6 billion in financing tied to the Microsoft contract, as well as $2.8 billion in financing tied to contracts with non-investment-grade customers.

Management told BTIG that recent customer prepayments have funded approximately 50% of GPU-related capital expenditures, and analysts expect this trend to continue. BTIG also noted that IREN has not borrowed against its data center infrastructure, which analysts said leaves the company with additional financing options.

Valuation

BTIG values IREN at approximately 9 times its fiscal 2027 EBITDA estimate of $2.1 billion, with the $80 price target reflecting roughly 10 times its fiscal 2028 EBITDA estimate of $3.8 billion, which remains under review.

IREN share price action: As of Friday's writing, IREN shares were down 13.71% at $34.98.