IREN Stock Surges 5% Following Jefferies Buy Rating With $79 Price Target

Key Takeaways

• Jefferies launched coverage on IREN stock with a Buy rating and set a price target of $79, suggesting approximately 30% upside potential from current levels near $60.50.
• Shares of IREN climbed roughly 5% in premarket trading Thursday after the analyst report was released.
• The firm highlighted IREN’s strategic partnerships with Microsoft and Nvidia, which could generate $3.1 billion in annual recurring revenue.
• According to Jefferies, IREN’s AI cloud infrastructure approach could yield superior long-term returns (~21%) compared to traditional colocation models (~13%).
• The company is pursuing international growth, having recently purchased Spanish AI data center developer Nostrum and revealed plans for an 800 MW facility in South Australia.

Shares of IREN Limited (IREN) rallied approximately 5% during premarket hours Thursday following Jefferies’ initiation of coverage with a Buy recommendation and a price target of $79. Prior to Thursday’s trading session, the stock was hovering around the $60.50 mark.

IREN Limited, IREN

Analyst Jonathan Petersen from Jefferies spearheaded the coverage initiation, emphasizing IREN’s extensive power capacity portfolio and its strategic transformation from cryptocurrency mining operations to AI cloud infrastructure as primary catalysts for the optimistic outlook.

According to the firm’s analysis, IREN controls access to approximately 6 gigawatts of secured power capacity worldwide. Remarkably, less than 10% of this capacity is currently deployed. This substantial unused capacity represents a significant growth opportunity in Jefferies’ view.

The company’s two flagship agreements involve Microsoft and Nvidia. The Microsoft arrangement at the Childress facility is structured as a five-year commitment valued at $9.7 billion for Nvidia GB300 GPU infrastructure. This agreement features a $1.9 billion advance payment along with $3.65 billion in GPU financing at approximately 6% interest rates.

The partnership with Nvidia, structured as a $3.4 billion AI Cloud agreement, was announced subsequently. Jefferies projects that these two major contracts combined have the potential to generate $3.1 billion in annual recurring revenue.

According to the investment firm, the Microsoft contract’s financial structure enables IREN to recover its $8.8 billion capital investment within the agreement’s duration, with unlevered internal rates of return exceeding 20%.

AI Cloud Infrastructure Versus Colocation Strategy

Jefferies presented a compelling case supporting IREN’s approach of operating proprietary AI cloud infrastructure instead of merely leasing data center capacity to third parties. The firm’s analysis projects AI cloud returns of approximately 21% over a 10 to 20 year horizon, substantially outperforming the 13% returns expected from a colocation business model.

This performance gap widens considerably over extended timeframes, and Jefferies maintains that direct ownership of land and data center facilities provides IREN with strategic flexibility unavailable to pure lease-based competitors.

Petersen characterized IREN as occupying “a unique place among AI infrastructure providers,” emphasizing that facility and land ownership enables the company to address diverse customer requirements ranging from basic powered shell configurations to comprehensive GPU cloud deployments.

International Growth Initiatives

IREN continues to pursue aggressive expansion plans. The company recently completed the acquisition of Nostrum, a Spanish AI data center development firm that contributes approximately 490 megawatts of grid-connected power capacity throughout Europe.

Prior to that transaction, IREN announced development plans for an 800-megawatt data center complex in South Australia, designed to capture AI workload demand throughout the Asia-Pacific market.

Jefferies also highlighted IREN’s financial position as robust. After accounting for GPU procurement and data center construction expenditures, the firm calculates that IREN maintains approximately $250 million in available capital for additional projects. However, some market observers suggest this figure could approach $900 million when recent capital raising activities are incorporated.

Jefferies identified IREN as a direct rival to CoreWeave (CRWV) and Nebius (NBIS), both companies operating within the vertically integrated AI infrastructure segment.

IREN shares concluded Wednesday’s session near $60.50, making Jefferies’ $79 price objective represent approximately 30% appreciation potential from current trading levels.

The post IREN Stock Surges 5% Following Jefferies Buy Rating With $79 Price Target appeared first on Blockonomi.