IREN Shares Plunge As AI Transition Hits Earnings

Shares of IREN Limited (NASDAQ:IREN) tumbled sharply after the company released its second quarter earnings on Thursday, February 5, 2026, revealing a challenging period marked by missed forecasts, a sector-wide selloff, and the ongoing complexities of a strategic pivot from Bitcoin mining to AI cloud services. The after-hours drop of 11.45% underscored investor anxiety, as the company’s results landed well below expectations and high-multiple AI stocks faced broader market skepticism.

According to Benzinga, IREN reported an earnings per share (EPS) of -$0.52, missing analyst estimates by a staggering -188.89% (the expectation was -$0.18). Revenue for the quarter came in at $184.7 million, a 23% decline from the previous quarter and 19.57% below forecasts, as detailed by Seeking Alpha and additional conference call transcripts. The primary culprit? A significant drop in Bitcoin mining revenue, reflecting both lower cryptocurrency prices and the company’s deliberate transition away from mining toward the more lucrative, but operationally demanding, AI cloud sector.

Despite the top-line disappointment, IREN’s leadership struck a confident tone on the earnings call. Daniel Roberts, Co-founder and Co-CEO, emphasized, “Power is not a constraint for us,” pointing to the company’s robust portfolio of secured power assets. He added, “We’re not here to optimize revenue in the next 4 weeks, compared to building something that’s durable and long-term value.” This long-term focus is central to IREN’s ongoing transformation, which has seen the company secure $3.6 billion in GPU financing at an interest rate below 6%, covering about 95% of the capital expenditures required for a $9.7 billion AI contract with Microsoft.

IREN’s financial foundation remains solid, with $2.8 billion in cash on hand and a total of $9.2 billion secured from a variety of funding sources. The company’s ambitious goal is to deploy 140,000 GPUs by the end of 2026, targeting $3.4 billion in annual recurring revenue (ARR). Construction is progressing on schedule at multiple sites, including a new 1.6 GW data center campus in Oklahoma, which brings the company’s total secured power to over 4.5 GW—an asset base that executives believe will be a critical differentiator in a power-constrained market.

Yet, the path to becoming a leading AI cloud platform is not without hurdles. The transition from Bitcoin mining to AI cloud services has introduced operational and financial complexity, with volatility in revenue streams and the need to balance capital allocation between new data center construction and ongoing customer negotiations. Adjusted EBITDA declined in the quarter, impacted by the lower Bitcoin mining revenue, while non-cash items reached $219.4 million. The company did, however, benefit from an income tax gain of $182.5 million, mostly due to the release of previously recognized deferred tax liabilities.

During the earnings call, executives highlighted the importance of their vertically integrated model. Kent Draper, Chief Commercial Officer, explained, “We design, build, and operate our own data centers, supported by in-house engineering, procurement, construction, technology, and operations teams. This structure gives us direct end-to-end control of our cloud offering and the ability to manage cost, timelines, and service quality.” This approach, he argued, allows IREN to deliver on complex projects and respond quickly to shifting market dynamics, such as the growing demand for air-cooled GPUs, which can be deployed faster than their liquid-cooled counterparts.

Customer demand, particularly from hyperscalers and large AI enterprises, remains robust. Draper noted, “Time to data center is the key decision point in many commercial discussions,” emphasizing that the speed and certainty with which IREN can bring new capacity online is a major selling point. The company currently has approximately $2.3 billion in annualized revenue run rate under contract, including around $400 million at its Prince George site in British Columbia. Executives expect this number to rise as additional contracts are finalized and new capacity comes online.

On the financing side, Anthony Lewis, CFO, detailed the company’s capital strategy: “Our capital strategy is designed to support continued rapid growth while maintaining a resilient balance sheet.” The recent $3.6 billion GPU financing package, secured from Goldman Sachs and J.P. Morgan, is a delayed draw term loan that aligns with IREN’s capital expenditure profile and is secured against both the GPUs themselves and contracted cash flows from Microsoft. Combined with Microsoft’s $1.9 billion in prepayments, this covers 95% of the GPU-related CapEx for the company’s major projects.

Looking forward, IREN is eyeing additional financing for further data center expansions and remains open to both cloud and colocation business models. However, as Roberts explained, “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.” Still, the company is not dogmatic: “We get a compelling colocation deal, we will absolutely pursue it, but right now, AI cloud looks very compelling for all those reasons.”

Analysts on the call pressed the management team on various operational and strategic risks, from the impact of ERCOT’s batch processing rules on power security at Sweetwater, to the ongoing demand for both new and older generation GPUs. Draper assured investors of the company’s strong position, stating, “The 2,000 MW is secure. We cannot reiterate that enough.” On the customer side, he noted that demand for older generation chips remains strong, particularly for inference workloads, and that “these chips will have a long, economically useful lifetime, you know, in excess of the contract lengths that we’re signing, even the Microsoft one at five years.”

Beyond the numbers, IREN’s founder-led approach and deep bench of human capital were also highlighted as competitive strengths. Roberts reflected, “This has been 7 years in the making of building a data center and technology platform. The very first data centers we built are now being used for NVIDIA GPUs for an AI cloud.” The company’s longstanding relationships with construction contractors and equipment suppliers, as well as its in-house expertise, have enabled it to weather industry constraints and consistently deliver on its targets.

Despite the rocky quarter and share price volatility, IREN’s leadership remains optimistic about the company’s ability to scale into one of the world’s largest AI cloud platforms. As Roberts concluded, “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.” With more than 4.5 GW of secured power and only 10% required to meet its $3.4 billion ARR target, the company appears poised for continued growth—provided it can execute on its ambitious roadmap and navigate the rapidly evolving landscape of AI infrastructure.

For investors and industry watchers alike, IREN’s journey from Bitcoin miner to AI cloud contender offers a revealing look at the challenges and opportunities facing technology companies in a sector defined by relentless change and outsized ambition.