Bernstein says IREN selloff reflects missing AI deal, not earnings, with bitcoin no longer central to investment case

IREN shares fell sharply after the bitcoin miner-turned AI diversifier’s latest earnings report on Thursday. Analysts at research and brokerage firm Bernstein said the decline reflected disappointment over the absence of a new AI deal rather than a breakdown in fundamentals.

The stock (Nasdaq: IREN) slid about 18% after posting the results, extending losses already triggered by a broader selloff in bitcoin mining stocks, and is currently trading for around $39.79.

The reaction followed IREN’s fiscal second-quarter earnings, which missed analysts’ revenue expectations amid lower bitcoin mining output and prices. IREN said the results reflected continued progress in reallocating capacity from bitcoin mining toward higher-value AI workloads.

Optics over execution

In a note to clients on Friday, Bernstein analysts led by Gautam Chhugani argued that bitcoin earnings have become “not relevant to a largely AI story” and that investors were instead looking for confirmation of another large hyperscaler agreement following IREN’s existing contract with Microsoft.

The analysts noted that IREN did not announce a new AI customer alongside earnings, which they described as the “real market disappointment.” Management said it remains in discussions with multiple potential clients, including negotiations that could lead to multibillion-dollar contracts, though Bernstein cautioned that GPU availability and supply-chain constraints could delay announcements.

While IREN’s bitcoin mining revenue fell quarter-over-quarter, Bernstein highlighted that AI cloud revenue more than doubled sequentially as GPU deployments ramped. The brokerage said IREN now has about $2.3 billion in contracted AI cloud annual recurring revenue and lifted its outlook to $3.4 billion by the fourth quarter of 2026, implying roughly 140,000 GPUs deployed by the end of the year.

The analysts also pointed to IREN’s balance sheet and financing structure as support for their longer-term thesis. They said IREN has secured roughly $3.6 billion in GPU financing for its Microsoft contract at interest rates below 6% and received about $1.9 billion in customer prepayments, funding most of the required GPU capital expenditure. With only around 10% of IREN’s roughly 4.5 gigawatts of power capacity currently contracted, Bernstein said the company retains significant flexibility to sign additional AI deals.

The analysts maintained an “outperform” rating and a $125 price target for IREN, framing the recent selloff as an expectation reset rather than a signal of deteriorating execution. In their view, the key variable for the stock in the near term is no longer quarterly mining revenue, but the timing of the next large AI contract that confirms IREN’s transition from bitcoin miner to AI infrastructure provider.

Gautam Chhugani maintains long positions in various cryptocurrencies.

© 2026 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.