It's been an eventful week in the artificial intelligence (AI) space. One AI cloud infrastructure provider announced a surprisingly large deal with tech giant Microsoft. Oracle also shocked investors by announcing that its cloud infrastructure backlog has more than quadrupled year over year.
That led the stock of one relatively small AI data center manager to surge. Iren Limited (IREN -9.57%) shares have soared about 80% in the last month, including almost 26% this week as of Thursday's closing bell, according to data provided by S&P Global Market Intelligence.
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Iren's intriguing business model
The flurry of activity this week began when Microsoft agreed to a five-year contract with Nebius Group to supply the tech giant with AI cloud infrastructure capacity at its New Jersey data center. Nebius has accumulated Nvidia processors and built data center capacity to lease to companies needing AI workloads.
Iren Limited is taking a similar strategy to Nebius but with one big differentiating factor: Iren is scaling up its AI cloud graphics processing unit (GPU) capacity partially with revenue generated by its existing Bitcoin mining operations.
Nebius stock soared on its news this week, and brought Iren and others in the same space along with it. Iren reported about $500 million in fiscal 2025 revenue and expects to more than double that in annualized revenue this fiscal year. The company expects to ramp from about 1,900 GPUs currently in operation to 10,900 in the coming months.
Iren is working on three data center projects, including one in British Columbia where it is transitioning from crypto mining to AI. The AI cloud market is where it sees opportunity. That view has been bolstered by the deal between Microsoft and Nebius this week. Even considering existing revenue and future cash generation, Iren will need additional financing to fully fund its growth plans.
It sees a clear opportunity to operate with 20,000 GPUs and eventually sees a pathway for up to 60,000. Investors wanted to get ahead of that growth this week, driving shares sharply higher.
