IREN Limited: A Data Center Power Play in Rebound Mode

IREN (NASDAQ: IREN) delivered eye-popping volatility in 2025, racing from low single digits to highs north of $75 before giving back a large portion of those gains. That combination, a four-digit percentage run followed by a steep pullback, is exactly why 2026 could be decisive. The key question now is whether the stock’s next major move is another speculative spike or the start of a more durable re-rating tied to AI infrastructure demand.

Early 2026 price action demonstrates that a rebound is underway, with other factors, including a shift to AI-focused operations, analyst sentiment trends, and institutional activity, suggesting it could gain momentum quickly. Based on sentiment trends, the upside potential begins at approximately 50% relative to the year-opening trade and could reach triple digits by year’s end. 

IREN Shifts Focus to AI: Drives Market Interest With MSFT Contract

IREN is a Bitcoin-focused data center operator with more than 95% of its 2025 revenue coming from those operations. The company is recognized for its vertical integration, emphasis on green technology, and plans to shift its operational focus to AI. 

Vertical integration is critical because this company owns the land, power systems, and data centers that generate its revenue. The emphasis on green technology is also important, as it operates 100% of its operations on renewable energy, making it a sought-after operation for an industry in need of low-impact power. 

Regarding the shifting operational focus, IREN is turning its attention to AI, building two facilities in North America to support high-performance computing. 

The U.S. facility already has contracted business, including a $9.7 billion, 5-year contract with Microsoft (NASDAQ: MSFT) that piqued analyst attention. 

Analyst Sentiment Improved Into 2026

Analyst activity in the late half of 2025 included numerous initiations, upgrades, and price target increases, lifting both analyst coverage and the price target.

The analyst consensus beginning the new year is a Moderate Buy with a bullish bias; more than 60% of the ratings are Buy or better, and price targets are rising.

Up more than 50% in Q4, consensus forecasts 45% upside while the high-end range is above $100, suggesting more than 100% upside is possible. Institutional activity also aligns with a strengthening market and potential for robust rebound.

While institutional ownership remains relatively light at approximately 41% of the stock, the group accumulated in 2025, with activity accelerating sequentially on both a gross and net basis. The balance at year’s end was nearly $2 purchased for each $1 sold, which provided robust market support, as reflected in the chart action.

The stock price decline bottomed in early November, confirmed support in early December, and began rebounding by year’s end, extending it into the first days of 2026. 

IREN Is a Short-Squeeze Candidate in 2026

Short interest is both a risk and an opportunity. The short interest in this stock was in the high-teens in late December, sufficient to cap gains if not to pressure the market lower. Notably, though, this number was down from the prior months and the peaks set in October 2025. 

The high short interest is still certainly a concern, but the decline indicates short-covering is in play. 

Short covering is another factor driving the stock price rebound, and could accelerate it should a catalyst ignite short covering. In this scenario, IREN stock could retest or surpass the existing highs within weeks, if not days, of the event. 

An obvious potential catalyst is the Q2 earnings report for the company's fiscal 2026, scheduled for early February. Not only is the company forecasted to grow revenue by more than 90%, but there's also real potential that its performance will beat expectations.

100% of analysts tracked by MarketBeat have reduced their forecasts for the quarter, despite apparent industry demand. With this in play, quarterly performance and/or guidance will likely be well above market expectations, sustaining the bullish analysts, institutional, and short-covering trends in place. 

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