IREN Limited: Wonderful Business, Fair Valuation Into Earnings

Summary IREN Limited boasts unique dual focus on AI infrastructure and Bitcoin ￰0￱ IREN not looking cheap from multiples perspective, Wall Street analysts believe that the stock is fairly valued. IREN's earnings surprise record is short and not quite impressive. However, I think that investors will be paying more attention to the management's forward-looking ￰1￱ Limited ( IREN ) failed to break through a psychological level of $70 per share a couple of weeks ago and it currently trades at $62. The current 13% short interest is quite high, but I think that the stock still has potential to grow ￰2￱ AI revolution is not stopping due to the vast potential of generative AI to automate millions of routine tasks across the ￰3￱ stands out because it focuses not only on building its AI infrastructure but also has the capacity to self-finance its growth due to its highly profitable Bitcoin USD (BTC-USD) mining ￰4￱ is a big risk amid this entire AI frenzy, but IREN looks more like "a wonderful company at a fair price" rather than just a company with high ￰5￱ the AI momentum is still strong, I expect a bullish outlook from the management during the upcoming earnings release on November 6th .

Therefore, my take is that IREN is a Strong ￰6￱ fundamentals and earnings preview IREN is a company from Australia that focuses on two rapidly growing areas: AI infrastructure and Bitcoin ￰7￱ company's fiscal year ends on June 30, meaning that we already have FY 2025 financials ￰8￱ we can see in the Income Statement from the earnings presentation, AI infrastructure revenue represented a small portion of consolidated sales. IREN's FY2025 earnings However, AI infrastructure is the area where IREN invests aggressively at the ￰9￱ company boasts the status of "Nvidia preferred partner" meaning access to Nvidia's latest innovations. Moreover, the company not only has data center presence in the ￰10￱ also in Canada (three facilities in British Columbia, Canada).

I think that it is a solid strategy to mitigate potential energy bottlenecks because Canada is strong in renewable energy, particularly in ￰11￱ addition to that, Canada is also well known for its abundant traditional energy sources like natural gas, which is also considered to be a vital factor in powering the AI ￰12￱ website While the geographic factor might not seem like a strong enough differentiator because CoreWeave, Inc. (CRWV) and Nebius Group N. V. (NBIS) have much wider footprints overall, IREN's Bitcoin mining business is certainly something none of the competitors ￰13￱ generation helps IREN to be profitable and generate positive cash flow, which is vital to having more opportunities to invest in the AI ￰14￱ allows us to partially fund AI expansion from internally generated funds, which means lower dilution risks for investors and potentially a less leveraged balance sheet.

Moreover, having experience in Bitcoin mining also means that the company has expertise in ensuring efficient and cheap energy ￰15￱ efficient energy-wise data centers will be a competitive advantage over the long haul, which will make it easier for IREN to scale and expand profitability over ￰16￱ addition, I think that having these two businesses makes IREN more ￰17￱ example, if there is indeed an "AI bubble" and data center infrastructure demand growth will be slower than expected, IREN can switch its computing capacity to mining ￰18￱ vice versa, if in reality AI infrastructure becomes a more profitable business than Bitcoin mining, they can rebalance their capacity ￰19￱ by YCharts Therefore, I think that from a fundamental perspective, IREN looks like a very interesting investment opportunity.

Yes, the stock is already up by almost 500% over the last 12 months. However, the recent pullback erased the FOMO around this stock as the 14-day RSI dropped sharply from almost 80 to 60. I think that diminished overexcitement is a good situation prior to the upcoming earnings release, which is scheduled for November 6 ￰20￱ Analysts forecast a 325% year-over-year revenue growth in FQ1 2026 , with the non-GAAP EPS improving from -$0.27 to $0.13. I saw multiple times with other companies that investors become even more bullish when a company switches from negative to positive EPS on a year-over-year basis, which usually indicates profitability ￰21￱ the other hand, Wall Street analysts expect the company's EPS to be quite volatile over the next several ￰22￱ is nothing much to say about the earnings surprise record because IREN is still quite a young company and the record is quite short.

Moreover, I think that for a company that invests heavily in growth, an earnings surprise record does not matter much for ￰23￱ is highly likely that investors will be much more interested in new projects and partnerships that might be announced during the earnings ￰24￱ we saw all these massive deals between OpenAI (OPENAI) and semiconductor giants over the last few weeks, I expect IREN's management to express bullishness during the earnings ￰25￱ I also think that for any company it is always better to approach its earnings release with a strong share price momentum behind its back. I think that for a stock with such a robust momentum it is much easier to maintain investors' optimism during the earnings ￰26￱ factors I have to say that valuation is the biggest risk at the moment.

A $17 billion market cap for a company that generated only half-a-billion on a TTM basis is certainly a very generous ￰27￱ are betting big on potential growth from future AI infrastructure revenues, but there is always a risk of underperformance against forecasts, especially when the bar is quite ￰28￱ IREN fails to deliver on its long-term promises, investors will start aggressively selling the ￰29￱ of IREN's growth momentum will significantly depend based on AI ￰30￱ the other hand, Wall Street analysts believe that IREN's current share price is very close to its fair ￰31￱ Moreover, having Bitcoin mining as one of its businesses is not only about positives but also means ￰32￱ are extremely volatile, and it applies to the world's largest digital asset as ￰33￱ case the Bitcoin price drops sharply, the profitability of this business line will inevitably ￰34￱ it happens, IREN's competitive advantage of being able to self-finance some of its projects will ￰35￱ a result, the company will not have many options other than issuing more shares or raising more ￰36￱ scenarios will dilute shareholders' value either directly (due to increased outstanding share count) or due to a weaker balance ￰37￱ IREN's business mix of AI infrastructure combined with Bitcoin mining is absolutely unique, which provides several strategic advantages for the ￰38￱ stock isn't cheap, but I prefer to buy wonderful companies at a fair price rather than vice versa.