Goldman Sachs Initiates Iren (IREN) With Neutral Rating, Cites AI Growth and High Valuation

Iren Limited (NASDAQ:IREN) is one of the hottest large-cap stocks of 2025. On December 18, Goldman Sachs initiated coverage of Iren with a Neutral rating and $39 price target. The firm sees Iren as a primary beneficiary of the AI infrastructure boom, forecasting a 7x revenue increase by 2028. While the company’s massive deal to provide GPU capacity to Microsoft provides a clear near-term catalyst, Goldman Sachs warned that the stock is already trading at a premium. The firm remains on the sidelines due to a full valuation.

The centerpiece of Iren’s growth strategy is a landmark $9.7 billion AI cloud contract with Microsoft. Under the five-year agreement, Iren will provide Microsoft with access to 200MW of critical IT load powered by NVIDIA’s latest GB300 GPUs. This single contract is expected to contribute $1.94 billion in annual recurring revenue at an estimated 85% project EBITDA margin. To support this, Iren is accelerating construction of its Horizon 1–4 liquid-cooled data centers at the Childress, Texas site, which are engineered to Tier 3 standards and capable of supporting extreme rack densities of 130kW to 200kW.

In FQ1 2026, Iren reported revenue of $240.3 million, which was a massive 355% year-over-year increase compared to the $52.8 million reported in FQ1 2025. This momentum translated into a record net income of $384.6 million, largely supported by unrealized gains on financial instruments.

Iren Limited (NASDAQ:IREN) operates in the vertically integrated data center business in Australia and Canada. The company owns and operates computing hardware, as well as electrical infrastructure and data centers.

While we acknowledge the potential of IREN as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.