Iren vs. Applied Digital: Which Is the Better Long-Term Play?

If you're comparing two compelling AI infrastructure companies, you may already have Iren (NASDAQ: IREN) and Applied Digital (NASDAQ: APLD) on your radar. Both stocks experienced meteoric gains recently, but which company is going to be better in the long term for investors? Let's take a closer look at each business.

Similar beginnings with diverging paths forward

Both Iren and Applied Digital began in the crypto industry but are pivoting to AI and high-performance computing. While their paths and reasons for the reposition are similar, each is taking a different strategy to capture AI-related business.

Image source: Getty Images.

Originally, Iren owned and operated large-scale data centers specifically for Bitcoin mining purposes. The company understood the fluctuating economics within crypto mining and decided to move into AI data center services. Because Iren can operate in both crypto and high-performance computing, the company retains the unique flexibility to go back and forth depending on demand.

Iren's stock is up over 400% in the past 12 months. It does have a high forward price-to-earnings (P/E) ratio of around 50, and its price-to-sales (P/S) ratio is also on the incline, reaching 20 as of Jan. 27.

Iren recently secured a $9.7 billion AI cloud contract with Microsoft. It looks as though the company's pivot is paying off, as net income improved from a loss of $51.7 million in the first quarter of last fiscal year to a gain of $384.6 million in Q1 of fiscal 2026.

Applied Digital also began in crypto mining but now focuses on building high-performance data centers and offering long-term leases to customers with massive compute needs. This particular business model allows Applied Digital to capitalize on predictable and longer-term cash flows.

Applied Digital has had a wildly wonderful year on the market. The stock is up over 500% in the past 12 months. Revenue also increased 250% in its latest quarter. Applied Digital is benefiting from multibillion-dollar leases with hyperscalers like CoreWeave and another $16 billion in its backlog. Revenue shows no signs of slowing in the foreseeable future.

Who has the upper hand long term?

Whether you invest in Iren or Applied Digital is going to depend on what kind of investor you are and what you're ultimately looking for. If you need a bit more security in terms of cash flow predictability and revenue from contracts, Applied Digital may be more appealing to you.

Iren has optionality and upside potential, but with that also comes higher volatility due to the cyclical nature of crypto and the uncertainty within the AI compute market.

Both Iren and Applied Digital posted eye-popping returns this past year, largely driven by positive sentiment toward AI infrastructure. Neither stock should be considered low risk, though. Continued volatility is a given in this AI spending cycle. Investors in either company should have a higher risk tolerance and a longer time horizon. Choose Applied Digital for greater cash-flow predictability and Iren for its flexibility and upside potential.

Catie Hogan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Microsoft. The Motley Fool has a disclosure policy.