IREN's AI Cloud Contract: Is This Just Another Overhyped Tech Promise?
Alright, so IREN got a $9.7 billion AI cloud contract with Microsoft. Big whoop.
The Hype Train's Leaving the Station
Let's be real, every tech company these days is slapping "AI" on everything they can find, hoping to get a sweet, sweet government handout... I mean, investment. And IREN is no different. They’re touting "vertically integrated AI cloud platform" and "annualized run rate revenue of $3.4 billion by the end of 2026."
Okay, but here's the thing: how much of that is real, and how much is just smoke and mirrors? They're deploying NVIDIA GB300 GPUs across 200 megawatts of data centers. Fine. But what happens when the next big thing comes along? Are these data centers going to be obsolete in five years? Or worse, will IREN even be around in five years?
They're bragging about a 20% upfront prepayment from Microsoft, which "helps support capital expenditures." Translation: they needed the cash. Urgently.
The Devil's in the Details (and the Stock Price)
The stock price fell 12.37% after the earnings call. That says it all, doesn't it? Investors aren't buying the hype. They’re worried about those "increased operating expenses." Depreciation and share-based payments are eating into their profits. And offcourse they are. According to Earnings call transcript: IREN Ltd’s Q1 2025 sees stock drop despite AI gains By Investing.com, the stock took a hit despite AI gains.
IREN Co-CEO Daniel Roberts says, "We control the entire stack from the substation all the way down to the GPU." Okay, Danny boy, that's great, but does that mean you're actually good at all those things? Or just spread thin?
And CFO Anthony Lewis expects an "unlevered IRR of low double digits." Low double digits? That's it? My savings account almost makes that much.
The Tangent: My Landlord's "AI" Thermostat
Speaking of tech that doesn't work, my landlord just installed some "AI-powered" thermostat in my apartment. Apparently, it's supposed to "learn my preferences" and "optimize energy usage." All it's done so far is freeze me out at 3 AM and then blast the heat at noon when I'm not even home. I swear, if I have to deal with one more automated voice telling me to "conserve energy," I'm gonna...
... well, never mind.
The Questionable Future
IREN is targeting an annualized run rate revenue of $3.4 billion by the end of 2026. They plan to deploy an additional 40,000 GPUs in Canada. They're focused on "capital-efficient expansion." But what if the demand for AI services dries up? What if some new technology makes GPUs obsolete? What if Microsoft decides to pull the plug? Then what?
Then again, maybe I'm just being cynical. Maybe IREN is the real deal. Maybe they're going to revolutionize the world with their AI cloud services. But let's be real, it ain't likely.
So, What's the Catch?
They’re pulling the wool over our eyes, and we're all just too dumb to see it.