IREN stock jumps on heels of $9.7b Microsoft deal, analyst raises price targets

IREN Ltd. stock price continued its strong surge this month after the company inked a major data center partnership with Microsoft. 

Summary

• IREN share price jumped after inking a $9.7 billion deal with Microsoft.
• Analysts anticipate similar deals as it scales its data centers.
• Technical analysis suggests that the stock will retreat after earnings.

IREN, a top company in the Bitcoin (BTC) mining and data center industry, jumped to a record high of $75.3. It has soared by over 1,200% from its lowest level this year, bringing its market capitalization to over $19 billion. 

IREN stock has jumped after the company reached a $9.7 billion deal with Microsoft. This five-year deal will start implementation in 2026 and will include a 20% prepayment. It is estimated to have an EBITDA margin of 85%.

This is a significant validation for a company that pivoted to the AI colocation industry recently. Its most recent financial results showed that its AI collocation business generated just $7 million in the fourth quarter. 

By inking a deal with Microsoft, the hope is that the business will attract potential customers like Oracle, Meta Platforms, OpenAI, Amazon, and Anthropic. 

OpenAI has already made a similar deal with CoreWeave, while Meta Platforms reached a similar one with Nebius. 

Wall Street analysts believe that IREN’s business will continue to perform well in the coming years. Yahoo Finance‘s data shows that the average estimate for its revenue, to be released on Thursday, will be $241 million, a 344% annual increase.

It will then make $257 million in its second quarter and $1.2 billion in the current financial year. These are huge numbers for a company that made $512 million in the last financial year.

Most importantly, unlike CoreWeave, its business is already profitable, with annual earnings per share expected to be $1.6, up from 35 cents.

Analysts are optimistic that IREN’s stock price has more upside. In a note this week, Darren Aftahi, an analyst from Roth MKM, boosted his estimate from $82 to $94, representing a 55% upside from the current level.

Gautam Chugani, a Bernstein analyst, estimates that the stock will rise to $75, up by 24% from the current level.

IREN stock price technical analysis 

The daily timeframe chart shows that the IREN share price has been in a strong uptrend this year, moving from a low of $5 in April to a high of $75 this week.

As a result, the stock has remained above all moving averages, a sign that bulls are in control.

However, the risk is that the stock has formed a double-top pattern at $74 and a neckline at $48. It has also formed a bearish divergence pattern as the MACD indicator has pointed downwards.

Therefore, the stock will likely have a strong bearish breakdown as investors sell the news. This retreat will likely happen when it publishes its results later this week.