Shares of Bitcoin miner-turned-AI neocloud IREN Limited (IREN +1.99%) sank 21.3% in November, according to data from S&P Global Market Intelligence.
The stock's decline wasn't necessarily due to anything IREN did wrong -- quite the contrary, actually. In fact, IREN only had positive news at the company level.
Still, overall concerns about the safety of the AI buildout harmed virtually all companies involved in building multi-billion-dollar data centers -- especially those dependent on the debt markets to raise capital for the effort.
Given that IREN had appreciated some 500% on the year coming into the month, the stock saw a severe round of profit-taking. Yet, the pullback could present an opportunity if the AI infrastructure buildout continues at a rapid pace.
NASDAQ: IREN
Key Data Points
The debt markets blink when it comes to funding AI
IREN actually initially surged early in November upon the release of its third-quarter earnings and the announcement of a new five-year deal with Microsoft (MSFT +1.54%). IREN is one of the newer players in the AI data center space, having just recently converted from mining Bitcoin exclusively to hosting AI infrastructure. Prior AI tenants in IREN's owned and operated infrastructure include neoclouds Fluidstack and Together.ai. However, Microsoft is by far the most prominent, best-funded customer to date, and may likely pave the way for more big tech companies to rent GPU capacity from IREN.
After all, IREN owns nearly three gigawatts (GW) of secured grid-powered capacity, thanks to its prescient bet on securing a significant amount of low-cost, renewable energy-powered data center capacity before the AI boom took off. That's a massive amount of power; each gigawatt is roughly equivalent to the power capacity of an entire nuclear power plant. Counting the Microsoft deal along with its existing AI customers and the contracts it expects to bring online in 2026, IREN will only fill about 16% of that total capacity by the end of this year.
As investors came to realize IREN's unique asset in a power-constrained environment, the stock took off earlier in 2025. But the downside for IREN is that in order to build out its GPU-filled data centers, it will still have to raise billions of dollars ahead of receiving that rental income.
Image source: Getty Images.
That dependence on the capital markets is what caused the stock, along with virtually all of its neocloud and some big cloud peers, to sell off during November. During the month, the flood of new debt tied to AI infrastructure appeared to test the willingness of bond investors to fund these projects.
Late in the month, The Wall Street Journal reported that several newly issued bonds tied to AI data centers had declined in value on the secondary market. The WSJ highlighted that even bonds issued by large companies such as Oracle (ORCL 0.05%) had fallen, while a bond issued by IREN's neocloud peer CoreWeave (CRWV 5.20%) had fallen to 92 cents on the dollar, equivalent to a yield of 11%.
IREN has tons of potential, but depends on the kindness of capital markets
Fortunately, IREN was able to raise $1.0 billion in convertible bonds earlier in October, before the sell-off took place. However, even at this lower stock price, IREN once again turned to the capital markets, selling equity and more convertibles on December 1.
These bond raises should be sufficient to back the Microsoft deal. However, going forward, IREN will likely require additional capital to fully leverage its substantial grid-connected power capacity.
If the generative AI boom continues at a strong pace and IREN can continue to raise capital at reasonable prices, its potential appears to be massive. However, if the capital markets freeze up for any reason, growth could become difficult for this new AI player.
