Analysts at research firm Bernstein have significantly increased their price target for bitcoin mining company IREN to $75 per share, suggesting a potential 80% upside from its recent closing price. The revised forecast is driven by the company's rapid expansion into the artificial intelligence cloud services market, a move that has already propelled its stock to new all-time highs.
The firm maintained its "outperform" rating for IREN, citing growing confidence in the miner's ability to generate substantial revenue from its AI division. This strategic shift has distinguished IREN from its competitors and attracted positive attention from market analysts.
Key Takeaways
- Bernstein analysts raised their price target for IREN stock to $75, implying an 80% increase from its Tuesday closing price of $41.77.
- The upgrade is based on the expected "exponential" growth of IREN's artificial intelligence (AI) cloud business.
- IREN projects its AI services will generate an annualized revenue run rate of $500 million by the first quarter of 2026.
- The company's stock has surged over 500% in the last six months, reaching a market capitalization of $12.2 billion and surpassing key competitors.
Analyst Confidence in AI Pivot Drives New Valuation
In a note to clients, Bernstein analysts led by Gautam Chhugani explained that IREN's progress in its AI cloud business justifies a re-evaluation of the company's stock. The new $75 price target reflects a shift in how the firm values the company, moving away from a traditional discounted cash flow model to a sum-of-the-parts analysis.
This new model attributes a significant portion of IREN's enterprise value to its AI and co-location potential. According to the analysis, this segment now accounts for 87% of the company's value, with its traditional bitcoin mining operations making up the remaining 13%.
"We believe IREN has made adequate progress for us to take the AI cloud business seriously, and build an investment case for re-rating," the Bernstein analysts wrote.
The analysts believe that as IREN's AI business matures and secures longer-term contracts beyond its initial proof-of-concept phase, there will be room for further multiple expansion.
Market Performance and Competitor Comparison
IREN's stock has experienced remarkable growth, gaining over 305% year-to-date and more than 500% in the past six months. On Wednesday, the stock rose over 12% in early trading, hitting a new all-time high above $47. With a market capitalization of $12.2 billion, IREN is now valued at nearly double its closest competitor, MARA, which has a market cap of $6.95 billion.
A Vertically Integrated AI Cloud Strategy
IREN's approach to the AI market differs from many of its peers in the mining sector. Instead of entering into capital-light hosting agreements with large-scale providers, IREN is building a vertically integrated AI cloud business. This strategy involves owning its power, land, and data center infrastructure outright.
According to Bernstein, this model allows IREN to capture the full economic benefits of its GPU capacity, rather than sharing profits through lease payments to external partners. The company controls nearly 3 gigawatts of low-cost power, a critical asset for energy-intensive AI and mining operations.
Rapid Expansion of GPU Infrastructure
To support its AI ambitions, IREN has aggressively expanded its hardware capabilities. The company has increased its GPU fleet tenfold in recent months to more than 23,000 units. This expansion includes acquiring high-demand hardware such as Nvidia's latest Blackwell chips.
This rapid scaling is central to its financial projections. IREN is targeting a $500 million annualized revenue run rate from its AI services by the first quarter of 2026. This represents a substantial increase from the $14 million run rate projected for early 2025.
Operational Efficiency
Early results from IREN's AI deployments have shown strong performance. The company has reported near-full utilization of its deployed hardware, and analysts note that its hardware margins are approaching an impressive 98%.
Balancing Bitcoin Mining with AI Growth
Despite its significant investment in AI, IREN remains a major player in the bitcoin mining industry. The company operates one of the largest self-operated mining facilities in the United States, with a hashpower capacity of 50 exahashes per second (EH/s).
The revenue generated from this core business is a key component of its overall strategy. Bernstein estimates that at current bitcoin prices, IREN's mining operations generate approximately $600 million in annualized EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). These funds are instrumental in financing the capital expenditure required for its AI buildout.
This dual-focus strategy provides IREN with significant operational flexibility. The company can dynamically allocate its resources, toggling between bitcoin mining and AI hosting depending on which activity offers better economic returns at any given time.
Future Outlook and Valuation Potential
While Bernstein's report acknowledges potential execution and financing risks, the overall outlook remains positive. The analysts highlighted that IREN's valuation still has room to grow, especially when compared to other companies in the cloud infrastructure space.
At the target price of $75 per share, IREN would trade at a valuation of approximately $7.5 million per megawatt of power capacity. While this is a premium compared to other miners pivoting to AI, it remains significantly below the multiples of established neocloud companies like CoreWeave, which average closer to $33 million per megawatt.
As IREN continues to scale its AI division and demonstrate consistent revenue growth, analysts believe the valuation gap between it and pure-play cloud providers could narrow, offering further potential for stock appreciation.
