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Bernstein analysts are pushing back on the market's read of IREN's $25 billion to $30 billion fiscal 2027 AI cloud capex plan, calling the reaction an overcorrection. The bitcoin miner's pivot into AI compute is showing improving unit economics, with GPU capex payback falling to around two years from roughly three years under its 2025 Microsoft contract, per a Friday note led by Gautam Chhugani.
Why it matters
The contrarian read lands against a sharp pre-market selloff, with IREN down 6.3% to $37.96 on Friday after Thursday's fiscal 2026 results. The year swung to a $702.6 million net loss from $86.9 million in net income, with $638.8 million of that tied to impairments as IREN decommissioned bitcoin mining rigs to free power and data center capacity for AI. AI cloud revenue did spike nearly eightfold to $128.8 million from $16.4 million, and bitcoin mining revenue rose 19% to $578.2 million.
Bernstein's case is that the contract math is the story, not the headline capex number. Annualized revenue per active IT megawatt has roughly doubled from about $10 million under the Microsoft deal to more than $20 million under recently signed three-year contracts, with three-to-five-year deals in discussion at around $25 million per megawatt. IREN currently runs $1 billion in operating cloud ARR and has $4 billion contracted against largely sold-out 2026 capacity, plus an expected $700 million Nvidia contract in 2027, putting total contracted cloud ARR at $4.7 billion.
Market impact
Funding has kept pace with the buildout. Bernstein estimates IREN has raised $19 billion over the past 12 months through customer prepayments, GPU financing, convertible debt, and equity, with about $14 billion still in cash or undrawn. Another $8 billion is expected from new GPU financing and prepayments, with operating cash flow and data center financing covering the remaining $3 billion to $8 billion. CoinShares head of research James Butterfill added Thursday that US grid connection times for new facilities now average around five years, a moat for IREN's already-powered footprint.
Frequently asked questions
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What did Bernstein say spooked investors about IREN's AI buildout?
Bernstein analyst Gautam Chhugani said IREN's $25B-$30B fiscal 2027 AI cloud capex guidance 'spooked the market,' but argued investors are overlooking improving unit economics, including a shorter GPU payback period.
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How much of IREN's cloud revenue is already contracted?
IREN has $1B in operating cloud ARR and $4B contracted against largely sold-out 2026 capacity, plus an expected $700M Nvidia contract in 2027, putting total contracted cloud ARR at $4.7B.
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How fast is IREN's GPU capex paying back?
Bernstein estimates GPU capex payback has fallen to around two years, compared with roughly three years under IREN's 2025 Microsoft contract. New three-year contracts are running at more than $20M per IT megawatt annually.
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Why did IREN swing to a net loss in fiscal 2026?
IREN posted a $702.6M net loss, swinging from $86.9M in net income a year earlier, including $638.8M in impairments from decommissioning bitcoin mining rigs to free power and data center capacity for AI compute.
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What is Bernstein's price target on IREN?
Bernstein maintained its Outperform rating and $100 price target, implying 147% upside from Thursday's close of $40.53.
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