Iris Energy Divides Analysts With AI-Focused Expansion Plan
Iris Energy, a company at the intersection of Bitcoin mining and AI infrastructure, has sparked a divide among analysts. Some advise selling, while others see potential in the strategic shift towards AI, as evidenced by recent mixed analyses.
Iris Energy operates with 2,910 MW of secured network capacity in the US and Canada. The company aims to generate more stable cash flows from AI contracts to reduce dependence on volatile Bitcoin mining revenues. This strategic move has been supported by securing new multi-year iCloud service contracts with leading AI companies for NVIDIA Blackwell GPU deployments, doubling its AI cloud capacity to 23,000 GPUs.
The company plans to raise $875 million through convertible notes, with an option for an additional $125 million. This capital will be used to finance the expansion of AI infrastructure, targeting over $500 million in recurring revenue annually from the AI cloud business. The convertible notes have a maturity date of July 2029 and are callable as of January 2029 if the stock price exceeds 130 percent of the conversion price.
Analysts have differing opinions on Iris Energy's future. JPMorgan downgraded the stock to 'Underweight' with a price target of $24, warning of inflated valuations. However, Bernstein and Roth/MKM remain optimistic, setting price targets of $75 and $82 respectively, citing the growth of the AI cloud market.
Iris Energy's future remains uncertain, with analysts divided on its prospects. The company's strategic shift towards AI and plans for expansion have been met with both optimism and caution. Despite the mixed reviews, Iris Energy continues to secure contracts and expand its AI cloud capacity, positioning itself for growth in the AI infrastructure market.
