Summary IREN Limited boasts unique dual focus on AI infrastructure and Bitcoin mining. Despite IREN not looking cheap from multiples perspective, Wall Street analysts believe that the stock is fairly valued. IREN's earnings surprise record is short and not quite impressive. However, I think that investors will be paying more attention to the management's forward-looking statements. IREN Limited ( IREN ) failed to break through a psychological level of $70 per share couple of weeks ago and it currently trades at $62. The current 13% short interest is quite high, but I think that the stock still has potential to grow further. The AI revolution is not stopping due to the vast potential of generative AI to automate millions of routine tasks across the world. IREN stands out because it focuses not only on building its AI infrastructure but also has capacity to self-finance its growth due to highly profitable Bitcoin (BTC-USD) mining business. Valuation is a big risk amid this entire AI frenzy, but IREN looks more like "a wonderful company at a fair price" rather than just a company with high multiples. Since the AI momentum is still strong, I expect bullish outlook from the management during the upcoming earnings release on November 6th . Therefore, my take is that IREN is a Strong Buy. IREN fundamentals and earnings preview IREN is a company from Australia that focuses on two rapidly growing areas: AI infrastructure and Bitcoin mining. The company's fiscal year ends on June 30, meaning that we already have FY2025 financials available. As we can see in the Income Statement from the earnings presentation, AI infrastructure revenue represented a small portion of consolidated sales. IREN's FY2025 earnings However, AI infrastructure is the area where IREN invests aggressively at the moment. The company boasts status as "Nvidia preferred partner" meaning access to Nvidia's latest innovations. Moreover, the company does not only have data center presence in the U.S. but also in Canada (three facilities in British Columbia, Canada). I think that it is a solid strategy to mitigate potential energy bottlenecks because Canada is strong in renewable energy, particularly in hydroelectricity . In addition to that, Canada is also well known for its abundant traditional energy sources like natural gas, which is also considered to be a vital factor to power AI revolution. IREN website While the geographic factor might not seem strong enough differentiator because CoreWeave (CRWV) and Nebius (NBIS) have much wider footprint overall, IREN's Bitcoin mining business is certainly none of the competitors have. Bitcoin generation helps IREN to be profitable and generate positive cash flow, which is vital to have more opportunities to invest in the AI infrastructure. This allows to partially fund AI expansion from internally generated funds, which means lower dilution risks for investors and potentially less leveraged balance sheet. Moreover, having experience in Bitcoin mining also means that the company has expertise in ensuring efficient and cheap energy supply. Having efficient energy-wise data centers will be competitive advantage over the long haul, which will make easier for IREN to scale and expand profitability over time. In addition, I think that having these two businesses makes IREN more flexible. For example, if there is indeed an "AI bubble" and data center infrastructure demand growth will be slower than expected, IREN can switch its computing capacity to mining Bitcoin. And vice-versa, if in reality AI infrastructure becomes a more profitable business than Bitcoin mining, they can rebalance their capacity accordingly. Data by YCharts Therefore, I think that from fundamental perspective, IREN looks like a very interesting investment opportunity. Yes, the stock is already up by almost 500% over the last 12 months. However, the recent pullback erased the FOMO around this stock as the 14-day RSI dropped sharply from almost 80 to 60. I think that diminished overexcitement is a good situation prior to the upcoming earnings release, which is scheduled for November 6 post-market. SA Analysts forecast a 325% year-over-year revenue growth in FQ1 2026 , with the non-GAAP EPS improving from -$0.27 to $0.13. I saw multiple times with other companies that investors become even more bullish when a company switches from negative to positive EPS on a year-over-year basis, which usually indicates profitability inflection. On the other hand, Wall Street analysts expect the company's EPS to be quite volatile over the next several quarters. There is nothing much to say about earnings surprises record because IREN is still a quite young company and the record is quite short. Moreover, I think that for a company that invests heavily in growth, earnings surprise record does not matter much for investors. It is highly likely that investors will be much more interested in new projects and partnerships that might be announced during the earnings call. Since we saw all these massive deals between OpenAI (OPENAI) and semiconductor giants over the last few weeks, I expect IREN's management to express bullishness during the earnings call. SA I also think that for any company it is always better to approach its earnings release with a strong share price momentum behind its back. I think that for a stock with such a robust momentum it is much easier to maintain investors' optimism during the earnings call. Mitigating factors I have to say that valuation is the biggest risk at the moment. A $17 billion market cap for a company that generated only half-a-billion on a TTM basis is certainly a very generous valuation. Investors are betting big on potential growth from future AI infrastructure revenues but there is always risk of underperformance against forecasts, especially when the bar is quite high. If IREN fails to deliver on its long-term promises, investors will start aggressively selling the stock. Longevity of IREN's growth momentum will significantly depend on strength of AI tailwinds. On the other hand, Wall Street analysts believe that IREN's current share price is very close to its fair value. SA Moreover, having Bitcoin mining as one of its businesses is not only about positives but also means risks. Cryptocurrencies are extremely volatile, and it applies to the world's largest digital asset as well. In case Bitcoin price drops sharply, profitability of this business line will inevitably shrink. If it happens, IREN's competitive advantage of being able to self-finance some of its projects will diminish. As a result, the company will not have many options other than issuing more shares or raising more debt. Both scenarios will dilute shareholders' value either directly (due to increased outstanding share count) or due to weaker balance sheet. Conclusion IREN's business mix of AI infrastructure combined with Bitcoin mining is absolutely unique, which provides several strategic advantages for the company. The stock isn't cheap, but I prefer to buy wonderful companies at fair price rather than vice versa.
