Okay, let's see what the market's buzzing about today.
IREN: More Hype Than Substance?
IREN, an Australian data center company, has seen its stock jump 20% on Monday, adding to an already impressive 500% year-to-date rally. The catalyst? A $9.7 million deal with Microsoft to provide AI cloud capacity. Sounds impressive, right? Well, let’s dig a little deeper.
The press release is all sunshine and rainbows, touting Microsoft as IREN's "biggest customer." But $9.7 million over five years? That's roughly $1.94 million per year. For Microsoft, a company with billions in cash, that's a rounding error. A rounding error, I tell you. It's like Jeff Bezos finding a twenty in his old coat—nice, but hardly life-changing.
IREN's co-CEO, Daniel Roberts, claims this deal "marks another major step forward" and reinforces their position as a "leading AI Cloud Service Provider." Bold words. IREN is getting access to Nvidia's GB300 GPUs at their facility in Childress, Texas. Okay, that's something. But how much capacity are we talking about? The press release is conveniently silent on that crucial detail (a classic move, by the way).
The Eric Jackson Effect
What's really driving this surge? The article mentions "rising retail investor interest after being touted by hedge fund manager Eric Jackson." Ah, yes. The "Eric Jackson effect." Jackson, apparently, is the "architect of this year's rally in Opendoor stock." So, we're dealing with a meme stock situation here. (Or, at least, the potential for one.)
I've seen this play out dozens of times. A company gets hyped by a prominent investor, retail investors pile in, and the stock goes parabolic. The fundamentals? Often secondary. The question isn't whether IREN is a good company (it might be), but whether the current valuation is justified. And that's where things get murky.
$9.7 million from Microsoft is not nothing, but it's hardly the kind of revenue that justifies a 500% year-to-date increase. IREN boasts a 3GW secured power portfolio in North America. Impressive, if you can actually use it. What's their utilization rate? What are their operating margins? Again, the press release offers little in the way of concrete numbers. I've looked at hundreds of these filings, and this absence of key metrics is usually a red flag. I am now going to switch to a first-person perspective for the remainder of this article.
I'm not saying IREN is a scam. But I am saying that investors should proceed with extreme caution. This smells like a classic case of hype outpacing reality. The partnership with Microsoft is real, but its financial impact appears to be significantly overstated. As one article put it, it's an under-the-radar AI stock is surging on news of a blockbuster deal with Microsoft.
