IREN stock price forecast: is it a good AI infrastructure play?

IREN stock price has been in a strong bull run in the past few months, moving from a low of $5.17 in April to nearly $30 today. Its market capitalization has jumped from $1.1 billion to $7.25 billion, making it one of the best-performing in Wall Street today.

Bitcoin mining and AI infrastructure 

IREN, formerly known as Iris Energy, is a top Australian company in the Bitcoin mining industry. The company is known for being the most energy-efficient ones in Bitcoin mining. It is more efficient than other top companies like Cipher Mining, Bitfarms, and CleanSpark.

Like a few other companies, IREN is transitioning and diversifying its business. While Bitcoin mining is a thriving industry, it has a significant limitation in that the mining difficulty increases every four years, making it more challenging to produce new coins.

Therefore, the company is slowly diversifying its business as it seeks to become a major player in the AI infrastructure industry. It recently purchased 4.2k Nvidia Blackwell GPUs and then raised money to buy 8.5k more. 

The most recent results showed that IREN’s business did well in the last financial year, helped by its Bitcoin mining business. Its revenue jumped by 168% to $501 million.

Its fourth-quarter revenue rose to $187 million, driven by $180 million in its mining operations. Most notably, its AI business, while small, had substantial growth, with its revenue rising to $7 million from $3.6 million in the same period lat year. 

IREN has become a highly profitable company, with it net income rising to $176.9 million. This growth was mostly because Bitcoin price was much higher in Q4 than it was last year. 

Why the IREN stock has soared

The main reason why the IREN share price has soared is that investors believe that it could become a major player in the AI industry. 

In this, investors see it replicating other companies that have become multi-billion-dollar entities. For example, CoreWeave’s market cap has jumped to over $44 billion, a few years after it transitioned from a Bitcoin mining company to an AI data center firm. 

Most recently, CoreWeave bought Core Scientific in a $9 billion. This purchase was notable because Core Scientific nearly went bankrupt until it pivoted to the AI industry. 

There are signs that the AI industry will continue doing well in the coming years. For example, Microsoft reached a $17 billion deal with Nebius on Monday, while OpenAI reached an $11 bilion deal with CoreWeve earlier this year. 

Analysts are optimistic that the company will continue growing in the coming quarters. Its revenue estimate for the current quarter is $244 million, up by 348% from the same period last year. It will make $1.09 billion this year, a 114% increase from last financial year.

IREN share price technical analysis

The daily timeframe chart shows that the IREN stock price bottomed at $5.17 in April this year and then rebounded to a high of $30 last week.

It recently moved above the important resistance point at $15.8, the upper side of the cup-and-handle pattern. The stock has moved much higher than all moving averages, while the Relative Strength Index (RSI) remains nearly 70.

Therefore, while IREN has more upside, there is a likelihood that the stock will pull back because of the concept known as mean reversion. This is a situation where it moves closer to its historical averages and then resumes the uptrend.

The post IREN stock price forecast: is it a good AI infrastructure play? appeared first on Invezz