Key facts
- Jefferies initiated coverage of IREN with a $79 price target.
- Jefferies believes IREN's AI cloud infrastructure strategy will outperform data center leasing.
- IREN has access to approximately 6 gigawatts of secured power globally.
- IREN's GPU cloud strategy is projected to yield higher returns than a colocation model.
- IREN's contracts with Microsoft and Nvidia are expected to generate $3.1 billion in annual recurring revenue.
- IREN recently acquired Nostrum, adding 490 megawatts of European grid power.
Jefferies has initiated coverage of IREN, a company transitioning from bitcoin mining to AI infrastructure, with a price target of $79. The investment bank believes IREN's strategy of operating its own AI cloud infrastructure will prove more valuable long-term than simply leasing data center capacity.
Jefferies highlighted IREN's unique position among its peers due to its substantial power portfolio, owned data center assets, and expanding GPU cloud business. The firm estimates IREN has access to approximately 6 gigawatts of secured power globally, with only about 10% currently in use.
According to Jefferies' analysis, IREN's focus on its GPU cloud strategy is projected to generate higher total cash flows over a 10 to 20-year period compared to a traditional colocation model. The firm estimates returns of around 21% for IREN's Microsoft-backed AI cloud buildout, versus 13% for a colocation approach.
Anchored by investment-grade tenant credit, IREN's contracts with Microsoft and Nvidia are expected to deliver $3.1 billion in annual recurring revenue. Jefferies also noted IREN's strong balance sheet, estimating approximately $250 million available for future projects after accounting for GPU and data center expenditures, a figure that could be closer to $900 million considering recent capital raises.
This initiation coincides with IREN's significant global expansion. The company recently acquired Nostrum, a Spanish AI data center developer, adding around 490 megawatts of grid power in Europe. Additionally, IREN announced plans for an 800-megawatt data center campus in South Australia to address AI demand in the Asia-Pacific region.
IREN shares rose 4% on Wednesday afternoon, trading around $60.50, suggesting approximately 30% upside to Jefferies' target price.