IREN's $9.7B Artificial Intelligence Agreement and Profit Jump Fail to Prevent 12% Share Decline

Shares of IREN Limited (IREN) dropped 12.37% after the company released its Q1 FY26 financial results, even though it landed a significant $9.7 billion AI cloud agreement with

and achieved all-time high revenue and profit figures. The stock ended the session at $66.96, as investors expressed concerns about the company’s ambitious, capital-heavy growth strategy and short-term execution challenges, according to a .

IREN’s first-quarter revenue soared 355% from the previous year to $240.3 million, fueled by its shift away from

mining toward AI cloud offerings. Net income reached $384.6 million, marking a sharp reversal from the $51.7 million loss reported in the same period last year. Adjusted EBITDA was $91.7 million, while total EBITDA surged to $662.7 million, supported by gains from prepaid forwards and capped calls related to convertible notes, as detailed by Parameter. These results highlight IREN’s evolution into a fully integrated AI infrastructure company, utilizing its renewable-powered data centers and a secured 3GW power portfolio, according to a .

The agreement with Microsoft, which will last five years, gives the tech company access to 10% of IREN’s computing resources and includes a 20% upfront payment, projected to bring in $1.9 billion in annualized revenue. has also entered into multi-year partnerships with Together AI, Fluidstack, and Fireworks AI, aiming to increase its AI cloud annualized run rate to $500 million by the first quarter of 2026 and $3.4 billion by the end of 2026, as reported by Parameter. The company intends to install 140,000 GPUs across its U.S. and Canadian sites, establishing itself as a leader in large-scale GPU clusters for AI training and inference, according to the Pulse2 article.

The expansion strategy features liquid-cooled data centers at its 750MW Childress, Texas campus, with phased rollouts planned through 2026. In British Columbia, 160MW of capacity is being shifted from Bitcoin mining to GPUs by year-end, while the 2GW Sweetwater Hub is set to power up two substations between 2026 and 2027, as noted by Parameter. IREN’s financial position remains strong, with $1.8 billion in cash and equivalents, and $1.0 billion in zero-coupon convertible notes issued in October 2025 to support its growth, Parameter also reported.

Despite these strengths, investors are cautious about increasing operating costs, the risks associated with executing large-scale projects, and the company’s reliance on major contracts like the Microsoft deal, according to an

. Daniel Roberts, IREN’s Co-CEO, highlighted the company’s disciplined approach and long-term strategy, stating, "We control the entire stack from the substation all the way down to the GPU" (Investing.com transcript). However, analysts point out that turning signed AI contracts into steady revenue will depend on timely GPU installations and meeting infrastructure targets, as mentioned in a .

The recent drop in share price reflects broader market doubts about whether IREN’s rapid expansion can be sustained. While the Microsoft deal affirms its AI infrastructure approach, the company’s ability to stay profitable amid heavy capital spending remains a key concern, as highlighted in a

.