A 10% drop in a single day—why couldn't the $9.7 billion order save IREN?

NEXT PICK · Market Insights

A 10% drop in a single day—why couldn't the $9.7 billion order save IREN?

Thursday, July 2, 2026

At the close on July 2, IREN plunged 10.39% to $38.82, with trading volume expanding to 1.3 times the three-month daily average, shrinking its market value to about $13.9 billion.

The trigger for the sell-off was not financial reports, but two external blows: Meta was reported to be planning to sell its surplus computing power externally and directly enter the AI cloud leasing market; Bernstein analysts also named IREN on the same day—its revenue per megawatt of electricity is lower than CoreWeave and Nebius, and it lags behind in both scale and enterprise customers.

Adding fuel to the fire is a nearly month-long simmering governance controversy: regulatory documents show the two co-CEOs received about $800 million in restricted stock, social media statistics show management's total stock compensation exceeds $1.1 billion, and the company is also executing a $6 billion share issuance plan.

Why did the company holding Microsoft's $9.7 billion AI cloud order see its stock price nearly halved from its peak? This is precisely the question this survey aims to address.

Latest price $38.82 ▼ -10.39%

Net loss for a single quarter $248 million ▼ Nearly 60% month-on-month increase

Microsoft contract $9.7 billion ▲ Annualized revenue of 1.94 billion yuan

From Bitcoin mining farms to AI data centers: a gamble-style engine swap

IREN was formerly Iris Energy, a vertically integrated data center company registered in Australia: acquiring land, building its own power infrastructure, operating its own data centers, and starting out with Bitcoin mining. Its real assets are not mining rigs, but pre-locked cheap electricity—including energy resources bound in the form of prepaid forward contracts.

In fiscal year 2025 (ending June 2025), the company will have revenue of $501 million, a year-on-year increase of 167.6%, full-year net profit of $86.9 million, and free cash flow of $245.9 million—making it the most glorious year for the mining business.

The real story rewritten around November last year: IREN signed a five-year AI cloud contract worth about $9.7 billion with Microsoft, corresponding to about $1.94 billion in annualized revenue; The company then announced plans to expand its GPU cluster to 140,000 units by the end of 2026, targeting about $3.4 billion in annualized revenue.

But changing the engine comes at a cost. To make room for GPUs, the company proactively retired mining machines. Coupled with the decline in Bitcoin prices, revenue for the latest quarter (January to March 2026) plummeted to $144.8 million, with net losses widening to $247.8 million. The old engine has stalled, and the new engine hasn't been connected to the grid yet—that's what IREN looks like now.

Two Methods for a 19x Price-to-Sales Ratio: Bubble or Options?

With a market cap of about $13.9 billion compared to about $750 million in revenue over the past four quarters, IREN's price-to-sales (P/S) ratio is around 19 times. This figure is glaring for a heavy-asset company with a recent operating margin of about -161%.

Due to consecutive heavy losses, the price-to-earnings ratio (P/E) has lost its reference value, and return on equity (ROE) has turned negative; The $245.9 million free cash flow for fiscal year 2025 was mainly supported by a single-quarter surge, and it is highly likely to have turned to net outflows in the past two quarters. Insufficient endogenous cash flow, the company can only rely on $6 billion in market value (ATM) issuance and $3 billion in convertible bonds to inject capital.

The scenario model in the research report delivers a harsh arithmetic

The pessimistic scenario is priced at a price-to-sales ratio of 3 to 4 times the traditional mining company, with an implied valuation below $2 billion; Neutral scenario is about $3.85 billion; Even under cloud computing logic, with an optimistic scenario of 12 to 15 times, the implied market value would be only about $10.1 billion—all three scenarios below current market value.

But this model has a fatal blind spot

It extrapolates on stock revenue and does not account for Microsoft's approximately $1.94 billion annualized revenue from contracts starting in 2027. If 140,000 GPUs are delivered on schedule and $3.4 billion in annualized revenue is realized, the same multiplier results in another world. The essence of the valuation battle is whether you believe this contract can become a machine and a bill. So why would the market pay a deposit of 19 times the price-to-sales ratio today? This is exactly where the bears refuse to back down.

Below the moving average: The market temporarily stops paying for growth stories

The report categorizes IREN as mature: mining revenue peaked at $240.3 million in the September 2025 quarter but then declined for three consecutive quarters, dropping to just $144.8 million in the latest quarter, almost back to the level from a year ago—the lifecycle of the old business has indeed finished its upward phase.

But a more accurate term might be the "gear shift period"

The decline in revenue is partly due to the voluntary retirement of mining machines and the replacement of GPUs. The market vote was straightforward—the stock price has simultaneously fallen below the 50-day moving average at $54.61 and the 200-day moving average at $49.1, indicating that funds are temporarily treating it as a distorted cyclical stock rather than a growth stock. To reclaim valuation for a transformation story, you first need to put up real money from invoicing GPUs.

CoreWeave ahead is Meta: the second tier in the cracks

In the AI cloud (neocloud) sector, IREN's direct competitors are CoreWeave and Nebius. Bernstein's criticism is sharp: for the same one megawatt of electricity, IREN generates lower revenue, and its accumulation of enterprise-level customers and overall scale lag behind.

In their traditional mining circles, Marathon, Riot, and CleanSpark hold larger hash networks and bargaining power over procurement; Meanwhile, HIVE, with a market cap of only about $1.36 billion and a price-to-earnings ratio of less than 10 times, is also combining mining and high-performance computing — peers' valuation anchors highlight IREN's premium relying heavily on AI narratives.

What about the moat? Mining machines are affordable for everyone, AI computing power customers have low switching costs, and network effects are virtually nonexistent. IREN's real barrier is just one thing: high-capacity data centers already powered up and locked electricity prices. On July 2, the news that Meta plans to sell excess hash power to the outside market hit a weak spot—when major manufacturers themselves enter the market to sell hash power, how much pricing power do second-tier players still have?

A cake worth hundreds of billions of dollars, and a ticket to enter with prepaid tuition

The AI inference computing power market will be worth hundreds of billions of dollars in the coming years, which is the premise for all neocloud valuations; Mining data centers naturally possess high power capacity and have a ready-made physical foundation for transitioning to high-performance computing (HPC). IREN's ticket to entry is real: Microsoft's contract plus a deployment plan for 140,000 GPUs corresponds to management's approximately $3.4 billion annualized revenue target.

However, tuition must be paid before entering. GPU procurement is a massive capital expenditure, which is exactly what the $6 billion additional issuance will be for; The old business is constrained by the "Red Queen effect" of the overall network computing difficulty, with a clear long-term ceiling. How big a pie you can get depends on whether you can continuously pass financing, delivery, and operations and maintenance—if any one of these obstacles hits the market, the service market shrinks from hundreds of billions to a regional business.

The confidence of bulls: a future written into contracts

Bulls do not shy away from losses; their logic is: the market only focuses on the revenue gap caused by retired mining machines, but underestimates the income already signed and pledged.

▲ Bull Case

The bearish ledger: a trio of dilution, losses, and blood loss

The bears' answer is equally direct: contracts are for the future, dilution and losses are for now, and the holes are getting bigger and bigger.

▼ Bear Case

For the next six months, keep an eye on these four things

IREN's long-short divides won't be resolved by verbal battles; every delivery node next is a voting day:

•	Fiscal Year Reports Around August 2026: Whether GPU invoice revenue can be recorded at scale for the first time directly tests the quality of the transformation
•	Microsoft's contract delivery and 140,000 GPU installation pace (within 2026): fulfillment revaluations will revolve upward, delays will continue to push valuations down
•	Execution speed of $6 billion ATM: the faster the additional issuance, the heavier the dilution, but the more stable the capital chain, with the direction depending on how the funds are realized
•	Meta's deployment of external computing power and Bitcoin's price trajectory determine the pricing environment of AI cloud and the cash flow of existing mining, respectively

From 147% celebration to near-halving: a full round of anticipation roller coasters

Let's take the camera back two years

IREN's revenue for fiscal year 2024 is only $187.2 million, still operating at a loss, making it an unremarkable mining company with an Australian background. Subsequently, the AI narrative ignited, combined with Microsoft's large orders and a single-quarter net profit of $384.6 million in the September 2025 quarter—most of which came from unrealized gains from financial instruments—pushed the stock price up as much as 147.9% in 12 months.

The tide shifted in the first half of 2026: two consecutive quarters of losses, a $6 billion IPO in March, the exposure of sky-high executive compensation in June, and a double blow from Meta and Bernstein in early July. The stock price pulled back about 45% from its peak and fell another 26.4% in the past 30 days. This is not the fault of any single message, but rather the market's systematic repricing of the "cost of transformation".

⚠️ Risk Notice • During the transition period, it suffered consecutive huge losses, with the latest quarterly net loss at $247.8 million, with cash consumption far exceeding endogenous self-sustaining capacity • With a $6 billion additional issuance and $3 billion in convertible bonds, combined with sky-high stock compensation, shareholder equity continues to be diluted • Microsoft's contracts heavily rely on on-time GPU procurement and delivery, and capital expenditures or supply chain bottlenecks can drag down deliveries • Meta and other giants are selling computing power, potentially systematically driving down AI cloud rental prices • Bitcoin's price volatility combined with a beta coefficient of 4.23 has caused stock price volatility far exceeding the broader market

🟡 Neutral Microsoft's large orders and massive dilutions are just as real; before deliveries are fulfilled, neither bulls nor bears have a decisive proof.

💬 Discussion Don't rush to buy the dip; wait until GPU revenue hits in; IREN real-time buy and sell positions, post IREN to the official account for viewing.

Data source

•	Source: NextPick real-time market snapshot + IREN official earnings report and SEC announcements (Q3 FY26 results, ATM filing) + public coverage from mainstream financial media such as TipRanks, Investing.com, StockTitan.