Mon Jan 05 12:20:00 UTC 2026: Here’s a summary and news article based on the provided text:
Summary:
Iren Limited (IREN), a vertically integrated data center company operating in Australia and Canada, is experiencing rapid growth due to the AI boom. Goldman Sachs initiated coverage with a “Neutral” rating and a $39 price target, acknowledging its potential as a key player in AI infrastructure. The company has a massive $9.7 billion AI cloud contract with Microsoft to provide GPU capacity. This deal is expected to generate $1.94 billion in annual recurring revenue. Iren’s FQ1 2026 results showed a significant revenue increase (355% YoY) and record net income. However, Goldman Sachs considers the stock fully valued and remains on the sidelines. They believe other AI stocks may offer better risk-reward profiles.
News Article:
Iren Limited (IREN) Rides AI Wave, But Goldman Sachs Cautions on Valuation
NEW YORK, NY – Iren Limited (NASDAQ: IREN), a data center company specializing in high-density computing, is making waves as a major player in the AI infrastructure space. The company’s stock has been a standout performer in 2025, driven by the increasing demand for AI processing power.
Investment bank Goldman Sachs initiated coverage on Iren with a “Neutral” rating and a $39 price target on December 18. While recognizing Iren’s potential as a primary beneficiary of the AI infrastructure boom, forecasting a sevenfold revenue increase by 2028, Goldman Sachs tempered its enthusiasm, stating that the stock is already trading at a premium.
The driving force behind Iren’s growth is a landmark $9.7 billion AI cloud contract with Microsoft. Under this five-year agreement, Iren will provide Microsoft with access to 200MW of critical IT load powered by NVIDIA’s GB300 GPUs. The agreement is projected to generate $1.94 billion in annual recurring revenue with a highly profitable 85% project EBITDA margin. To fulfill this contract, Iren is expanding its Horizon series of liquid-cooled data centers in Childress, Texas, capable of supporting the intense power demands of advanced AI hardware.
The impact of the Microsoft deal is already evident in Iren’s financial performance. In FQ1 2026, the company reported revenue of $240.3 million, a substantial 355% increase compared to the $52.8 million recorded in FQ1 2025. This growth fueled a record net income of $384.6 million, bolstered by unrealized gains on financial instruments.
Despite the positive outlook, Goldman Sachs expressed caution, suggesting that the current stock price reflects the company’s future potential. The firm highlighted that other AI-related investments might offer more compelling risk-reward profiles.
Iren operates vertically integrated data centers in Australia and Canada, owning and managing computing hardware, electrical infrastructure, and the data centers themselves. The company’s success is closely tied to the continued expansion of AI applications and the increasing need for specialized data centers capable of supporting high-density computing.
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