Microsoft Just Gave Investors 9.7 Billion Reasons to Buy This Monster Artificial Intelligence (AI) Data Center Stock Hand Over Fist

For the last few years, some of the biggest winners of the artificial intelligence (AI) revolution have been chip designers and cloud computing service providers. Now, as hyperscalers continue racing to procure as many graphics processing units (GPUs) as possible and accelerate their data center footprints, a new pocket of the AI realm is beginning to emerge: infrastructure.

Within the broader infrastructure opportunity, neocloud services have risen in popularity throughout 2025. A neocloud is a specialized service in which businesses can rent access to GPUs through cloud-based infrastructure. To date, the most popular neocloud providers include CoreWeave, Oracle, and Nebius Group.

However, a new player is entering the spotlight: Iren (NASDAQ: IREN). Let's explore what makes Iren such a unique opportunity as the AI infrastructure boom continues to fire on all cylinders.

What is Iren and how does the company compete in the AI industry?

Iren's roots lie in cryptocurrency, where it originally focused on Bitcoin mining. To support this, the company built massive data centers outfitted with specialized hardware. Over time, management recognized that much of this infrastructure could also be used to complement the growing demands of AI computing.

Against that backdrop, Iren pivoted its business model to that of a neocloud. The value proposition of these infrastructure services is that businesses can rent GPU capacity directly from Iren instead of investing in time-consuming computing infrastructure buildouts themselves.

Image source: Getty Images.

Microsoft is spending tens of billions on neoclouds

Throughout the AI revolution, Microsoft has poured tens of billions of dollars into infrastructure. For the most part, this spending has revolved around bolstering the Azure cloud platform through strategic investments in OpenAI as well as new data center construction.

MSFT Capital Expenditures (TTM) data by YCharts

Over the last few months, however, Microsoft has made a splash in the world of infrastructure-as-a-service (IaaS). Specifically, the company signed a $17.4 billion deal with Nebius back in September.

The hyperscaler just complemented its partnership with Nebius with (you guessed it!) Iren. According to an 8-K filing from Nov. 2, Iren will be supplying Microsoft with access to Nvidia GB300 GPUs. Per the agreement, the contract is worth $9.7 billion and will be spread over five years -- beginning in 2026 and running through 2031.

Image source: Getty Images.

Is Iren stock a buy?

As of Nov. 3, shares of Iren have gained nearly 600% in 2025. Given such an abnormal return, it might appear that investors have missed out on their chance to recognize further gains.

Here's my take: Iren has become a momentum stock that's enjoyed a significant run-up due to the rising theme of AI infrastructure. In other words, Iren's share price has appreciated due to macro factors rather than the company's underlying performance.

Over the last year, Iren generated about $500 million in revenue. And yet, the company currently boasts a market capitalization of nearly $18 billion. At first glance, Iren would appear quite overvalued.

However, assuming the company experiences no customer churn and recognizes the Microsoft deal in equal payments over the next five years, that would put the company's annual revenue in the ballpark of $2.4 billion. Under these assumptions, Iren would be trading at an implied forward price-to-sales (P/S) ratio of 7.3.

Considering investment in AI infrastructure is projected to eclipse several trillion dollars over the next five years, Iren appears well-positioned to capitalize on these secular tailwinds. With this in mind, I think that Iren has the potential to grow into its valuation -- making it a lucrative stock to buy for investors looking for exposure at the intersection of AI hardware and services.

Adam Spatacco has positions in Microsoft and Nvidia. The Motley Fool has positions in and recommends Bitcoin, Microsoft, Nvidia, and Oracle. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.