Analysts on Wall Street react following IREN’s earnings shortfall.

The disappointing outcomes were mitigated by ongoing advancements in the bitcoin miner’s transition to AI infrastructure.

Here’s what Wall Street analysts are indicating following IREN’s earnings shortfall. (Shutterstock, modified by CoinDesk)

Key points:

• IREN reported second-quarter fiscal results that fell short of expectations, with revenue dropping to $184.7 million and losses increasing.
• Wall Street analysts are divided, with some concentrating on immediate earnings challenges while others highlight a reduced-risk AI infrastructure development and potential long-term benefits.
• B. Riley increased its price target for IREN to $83 from $74 while maintaining its buy rating for the stock.

IREN’s (IREN) recent earnings provided insight into a company undergoing a transformation, with shares currently reflecting the costs of this change. The company reported revenue and earnings that were lower than anticipated as bitcoin BTC$65,998.81 mining took a back seat to its swiftly growing AI cloud initiatives.

Facing unprecedented low margins after the 2024 halving, bitcoin miners are redefining themselves as digital infrastructure providers, transforming energy-intensive mining locations into AI-compatible data centers to pursue more reliable, long-term revenue streams.

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Once one of the top-performing stocks last year, not only in crypto but across the entire market, IREN has experienced a decline from its peak of nearly $77 in November. Following a market downturn on Thursday, shares are stable on Friday at $39.77, down approximately 20%.

IREN has secured $3.6 billion in GPU financing connected to its Microsoft contract, along with a $1.9 billion customer prepayment, funding that management states will cover around 95% of GPU-related capital expenditures as it expands its AI operations, a development that JPMorgan analysts Reginald Smith and Charles Pearce described as positive.

According to the Wall Street bank, IREN’s fiscal second-quarter revenue declined sequentially due to a reduction in average hashrate, fewer coins mined, and a quarter-over-quarter decrease in bitcoin prices impacting results.

While the negative effects from mining were somewhat counterbalanced by rapid growth in cloud services, where revenue more than doubled from the previous quarter to $17 million. This figure exceeded JPMorgan’s $14 million estimate but fell short of the Street’s $28 million projection. Management indicated that all energized GPUs are fully contracted, a sign the bank regarded as positive as the company transitions to AI infrastructure.

Cost management also played a role in mitigating the quarter’s outcomes. Cash SG&A significantly decreased to $43 million, while energy expenses fell due to a reduced average hashrate. Consequently, adjusted EBITDA reached $75 million, surpassing the bank’s estimate, driven by lower operational and energy costs. The bank currently has an underweight rating on the stock.

Investment firm B. Riley has raised its price target for IREN to $83 from $74 while reaffirming its buy rating, suggesting that the recent decline has created a favorable entry point.

This upgrade occurs despite a weaker fiscal second quarter, during which adjusted EBITDA of $75.3 million fell short of expectations. B. Riley noted that the earnings shortfall is outweighed by IREN’s advancements in its AI shift, including $3.6 billion in low-cost GPU financing related to its Microsoft agreement, a $1.9 billion prepayment covering about 95% of GPU capital expenditures, and an expanded power portfolio that now exceeds 4.5 gigawatts (GW).

Compass Point analyst Michael Donovan maintained a buy rating and a price target of $105 for IREN, stating that the recent earnings report indicates a company better positioned for growth, despite the weaker outcomes. He noted that IREN now possesses more reliable power and a clearer strategy to finance its expansion, which is more significant than a single disappointing quarter.

Donovan characterized the fourth quarter as a time of transformation. Revenue declined to $184.7 million as the company mined less bitcoin while transitioning its facilities from older bitcoin-centric machines to newer chips designed for artificial intelligence. Nevertheless, the revenue mix improved as AI-driven services started to constitute a larger portion of the business.

He highlighted the $3.6 billion financing arrangement associated with IREN’s Microsoft initiative as a crucial milestone. This funding exceeds initial plans and is structured so that funds are drawn as construction progresses and revenue contracts are activated.

Donovan anticipates IREN will start recognizing revenue from Microsoft toward the end of the second quarter of 2026, with revenue increasing incrementally thereafter. By the conclusion of 2026, he envisions a pathway for the business to generate approximately $3.4 billion in annualized revenue.

Read more: Weak earnings drag IREN, Amazon; bitcoin stocks rebound in pre-market