TLDR
- Jefferies initiated coverage of IREN with a Buy rating and a $79 price target, implying ~30% upside from ~$60.50.
- IREN stock jumped about 5% premarket Thursday following the announcement.
- Jefferies cited IREN’s Microsoft and Nvidia contracts as positioning the company to deliver $3.1B in annual recurring revenue.
- The firm sees IREN’s AI cloud model generating higher long-term returns (~21%) versus a colocation model (~13%).
- IREN is expanding globally, recently acquiring Spanish AI data center developer Nostrum and announcing an 800 MW campus in South Australia.
IREN Limited (IREN) stock jumped roughly 5% in premarket trading Thursday after Jefferies initiated coverage with a Buy rating and a $79 price target. The stock was trading around $60.50 heading into Thursday’s session.
Jefferies analyst Jonathan Petersen led the initiation, pointing to IREN’s massive power portfolio and its pivot from Bitcoin mining into AI cloud infrastructure as the core reasons for the bullish call.
The firm estimates IREN has access to roughly 6 gigawatts of secured power globally. Only around 10% of that is currently being used. That gap is a big part of the opportunity Jefferies sees.
IREN’s two headline deals are with Microsoft and Nvidia. The Microsoft lease at Childress is a five-year, $9.7 billion contract for Nvidia GB300 GPU capacity. That contract includes a $1.9 billion prepayment and $3.65 billion in GPU financing at roughly 6% interest rates.
The Nvidia deal, a $3.4 billion AI Cloud contract, followed shortly after. Together, Jefferies says these two contracts alone could drive $3.1 billion in annual recurring revenue.
The firm says the structure of the Microsoft deal allows IREN to recoup its $8.8 billion investment within the contract term, with unlevered internal rates of return above 20%.
AI Cloud vs. Colocation
Jefferies made a pointed argument in favor of IREN’s strategy of running its own AI cloud infrastructure rather than simply leasing out data center space. Over a 10 to 20 year window, the firm projects AI cloud returns of around 21% compared to just 13% under a colocation model.
That difference becomes more pronounced over time, and Jefferies believes owning the land and data centers gives IREN options that pure leasing plays don’t have.
Petersen described IREN as holding “a unique place among AI infrastructure providers,” noting that owning land and facilities lets it serve customers across a range from powered shells all the way to full GPU cloud builds.
Global Expansion
IREN isn’t sitting still. The company recently announced the acquisition of Nostrum, a Spanish AI data center developer that brings around 490 megawatts of grid power in Europe.
Weeks before that, IREN unveiled plans for an 800-megawatt data center campus in South Australia, targeting AI demand across the Asia-Pacific region.
Jefferies also noted IREN’s balance sheet looks solid. After factoring in GPU and data center spending, the firm estimates IREN has around $250 million available for future projects. Though some analysts believe that figure could be closer to $900 million once recent capital raises are counted.
Jefferies positioned IREN as a direct competitor to CoreWeave (CRWV) and Nebius (NBIS), both of which operate in a similar vertically integrated AI infrastructure space.
IREN stock closed Wednesday at around $60.50, with Jefferies’ $79 target representing roughly 30% upside from that level.
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