Bernstein: IREN's $25 billion to $30 billion AI expansion plan may raise concerns among investors

According to The Block, research and brokerage firm Bernstein stated that Bitcoin mining company IREN plans to invest $25 billion to $30 billion to expand its AI cloud business in fiscal year 2027. This scale of capital expenditure may "scare the market," but analysts believe investors are overlooking the improving economic benefits.

Bernstein analyst Gautam Chhugani pointed out in a report to clients on Friday that the payback period for GPU capital expenditures has shortened from about three years under the 2025 Microsoft contract to about two years. IREN's fiscal year 2026 performance released on Thursday showed that AI cloud service revenue grew nearly eightfold from $16.4 million the previous year to $128.8 million, while Bitcoin mining revenue reached $578.2 million, a year-on-year increase of 19%. Total revenue rose from $501 million to $707 million, but the company recorded a net loss of $702.6 million, partly reflecting a $638.8 million impairment due to the retirement of Bitcoin mining hardware to support AI cloud expansion.

Bernstein stated that IREN currently has an annualized run rate revenue of $1 billion from operating cloud and $4 billion in contract revenue, with its 2026 capacity nearly sold out. In addition to the expected $700 million related to the Nvidia contract in 2027, IREN's total contract cloud ARR amounts to $4.7 billion. Over the past 12 months, IREN has raised $19 billion through customer prepayments, GPU financing, convertible bonds, and equity issuance.