IREN Shares Plunge After Q2 Miss Amid AI Cloud Pivot

Shares of IREN Limited (NASDAQ: IREN) took a sharp hit on February 5, 2026, after the AI infrastructure and cloud computing company reported a challenging second quarter for fiscal year 2025. The announcement, delivered at 4:07 PM Eastern, came amid a sector-wide selloff that has investors suddenly wary of high-multiple artificial intelligence players. IREN’s stock price tumbled by 11.45% in after-hours trading, reflecting deep investor concerns about the company’s ongoing transition from Bitcoin mining to AI cloud services and its struggle to meet revenue expectations.

According to Benzinga, IREN missed estimated earnings by a staggering 188.89%, posting an earnings per share (EPS) of -$0.52 versus the anticipated -$0.18. The revenue story was similarly rocky: while revenue rose by $71.21 million compared to the same period last year, the company’s Q2 2025 revenue of $184.7 million still missed forecasts by 19.57%. This marks a 23% quarter-over-quarter revenue decline, a downturn largely attributed to a steep drop in Bitcoin mining revenue—a business segment that had been a mainstay for IREN until recently.

IREN’s leadership, however, struck a confident tone during their earnings call. Daniel Roberts, Co-founder and Co-CEO, opened by underscoring the company’s strategic pivot: “Fiscal quarter two was an important quarter for IREN as we made meaningful progress as a vertically integrated AI cloud platform.” He highlighted that IREN had secured $3.6 billion in GPU financing at an interest rate below 6%, a move intended to support a $9.7 billion AI contract with Microsoft and to fund the company’s ambitious expansion plans. “Power is not a constraint for us,” Roberts insisted, referencing IREN’s more than 4.5 gigawatts (GW) of secured power and its 810 megawatts (MW) of operating data centers. “We’re not here to optimize revenue in the next 4 weeks, compared to building something that’s durable and long-term value.”

The company’s financials paint a picture of transition and turbulence. Adjusted EBITDA declined, reflecting the impact of shifting from Bitcoin mining towards AI cloud workloads. Non-cash items for the quarter totaled $219.4 million, and a significant income tax benefit of $182.5 million was recorded. Still, IREN maintains a robust cash position, with $2.8 billion on hand and $9.2 billion secured from various funding sources.

On the operational front, IREN is pushing ahead with construction across several major sites, including a new 1.6 GW data center campus in Oklahoma. This brings the company’s total secured power to over 4.5 GW—a critical asset in a market increasingly constrained by limited power availability. Kent Draper, Chief Commercial Officer, emphasized the importance of this development: “The 2,000-acre Oklahoma site is a strong addition, with low latency connectivity to major network exchanges and ramp schedule commencing in 2028.” Draper also pointed to the company’s vertical integration as a key advantage, noting, “We design, build, and operate our own data centers, supported by in-house engineering, procurement, construction, technology, and operations teams.”

Despite the operational progress, the path forward is not without hurdles. The transition from Bitcoin mining to AI cloud services has introduced significant operational and financial challenges. Revenue volatility remains a concern, particularly as the company’s fortunes become increasingly tied to the emerging and highly competitive AI cloud market. There are also risks associated with potential delays in data center construction, competitive pressures from established cloud providers, and broader macroeconomic factors that could affect funding and investment climates.

Executives fielded a range of questions from analysts during the earnings call, addressing topics from the security of power for the Sweetwater site to the demand for both new and older generation GPUs. Draper assured stakeholders that “the 2,000 MW is secure,” emphasizing that recent regulatory changes, such as ERCOT’s batch processing rules in Texas, would not jeopardize IREN’s power agreements. When asked about the economics of colocation versus AI cloud services, Draper was unequivocal: “Today, we still see AI cloud as doing that in a more meaningful way than colocation. It’s higher up, obviously, in the value chain than colocation, and you can capture materially better dollars per megawatt through cloud versus pure colocation.”

Looking ahead, IREN is targeting $3.4 billion in annual recurring revenue (ARR) by the end of 2026, driven by its expanding AI cloud services. The company expects to deliver 140,000 GPUs by that time and has already secured significant customer contracts, including a landmark deal with Microsoft. Draper explained that “time to data center is the key decision point in many commercial discussions,” and the company’s ability to rapidly deploy new capacity is a major selling point for hyperscalers and large enterprises alike.

On the capital side, Anthony Lewis, Chief Financial Officer, outlined a strategy designed to support rapid growth while maintaining a resilient balance sheet. “We ended January with a strong cash position of $2.8 billion,” Lewis stated, adding that IREN has diversified its funding sources through customer prepayments, convertible notes, GPU leasing arrangements, and dedicated GPU financing. “This diversity of capital sources allows us to scale with confidence,” he said.

Nevertheless, the company’s stock performance underscores the skepticism that some investors feel about the pace and success of IREN’s transformation. The current share price remains well below its 52-week high, and the after-hours drop following the earnings report signals ongoing unease about the company’s ability to deliver on its ambitious promises. Still, Roberts and his team remain undeterred, pointing to the company’s “three Cs”—capacity, customers, and capital—as the pillars of its strategy. “With capital access now demonstrated at scale, we’re able to engage customers with greater flexibility on how and when we bring new capacity to market, while maintaining discipline around pricing and partner selection,” Roberts concluded.

For IREN, the next few quarters will be a crucial test of its ability to execute on this vision. The company’s vast power and data center assets, strong customer relationships, and deep capital reserves provide a solid foundation. Yet, the complexities of the AI cloud transition and the volatility of both technology and financial markets mean that the road ahead is anything but certain. Investors and industry watchers alike will be keeping a close eye on IREN’s progress as it seeks to redefine itself in the era of artificial intelligence.