IREN Stock Sinks 13% Despite AI Revenue Overtaking Bitcoin Mining

IREN stock dropped sharply on Aug. 28 after the AI infrastructure and Bitcoin-mining company reported mixed fiscal fourth-quarter results.

Shares fell roughly 13% toward $35 during Friday trading after closing at $40.53 on Thursday. The selloff came even as IREN reached an important milestone in its transition toward AI cloud infrastructure.

AI cloud services generated more quarterly revenue than Bitcoin mining for the first time. However, weak adjusted EBITDA and large impairment charges overshadowed the revenue shift.

IREN Stock Falls Despite AI Revenue Milestone

IREN stock continued its recent downward trend, reaching its lowest level in a month after the company published its earnings report. This report showed that the company achieved a major milestone as it transitions from a pure Bitcoin mining firm into an AI data center.

IREN’s AI cloud services revenue soared from $33.6 million in the second quarter of last year to $70.5 million. This revenue was much higher than the $66.7 million it made from its Bitcoin mining operation. Its mining revenue dropped because of the crypto winter, which pushed BTC to its lowest level in over a year.

The company also continued to reduce its mining operations as it replaced its miners to AI servers and GPUs.

IREN has become a major player in the AI space, attracting the attention of Nvidia. In a recent statement, Nvidia invested $2 billion in the company and is now one of its biggest shareholders. It also committed to leasing its spare capacity.

In its earnings report, IREN said that it had nearly sold out its capacity for the year, with demand remaining at an elevated high. For example, just this week, Anthropic reached a $46 billion deal with Nscale, a top competitor in the industry.

IREN has received several deals, with the one with Microsoft being its biggest. Microsoft will pay it $9.3 billion as part of the partnership. And most recently, it inked a $2.8 billion deal with several AI labs, including Perplexity, Cohere, and Figure AI.

As a result, the company’s revenue growth is expected to continue growing. For example, Yahoo Finance data shows that analyst expects that its annual revenue will jump by 40% to $718 million. It will then jump by 312% to over $2 billion in the next financial year.

IREN Shares Dropped Amid Key Concerns

There are several important reasons why the IREN stock dropped after its earnings report. First, the company made a big loss during the quarter. Its net loss jumped to $684 million from the $247 million it lost in the same period last year.

Second, the company’s debt is continuing growing as the cost of deployments continues. Its debt jumped to over $7.4 billion. In a new report today, the company said that it inked a $2.4 billion debt deal with Blue Owl, one of the top players in the private credit industry. $1.2 billion of this loan will be a senior-secured term loan, while the rest will be in senior-secured notes.

Third, the company is in a highly competitive industry, with companies like Lambda, Riot Platforms, and SpaceX entering the sector.

IREN Stock Price Analysis

The daily chart shows that the IREN share price recently peaked at $49.22 on August 13. It formed a shooting star candlestick pattern, which explains why it has slipped in the past few days.

The stock dropped below the 50-day EMA, while the Relative Strength Index (RSI) has dropped below 50 and is pointing downwards. These technicals suggest that bears remain in control for now.

Therefore, the path of the least resistance for the shares is bearish, with the next key target to watch being at $29. In the future, however, it will bounce back as bulls target the key resistance at $77, its highest point this year.

This article is for informational purposes only and does not constitute financial advice. Equity and cryptocurrency markets can experience sharp price movements.