Should You Buy, Sell or Hold IREN Stock Post Q2 Earnings?

IREN Limited IREN shares are up 5.1% since the company reported its second-quarter fiscal 2026 results on Feb. 5. The surge in share price can be attributed to strong momentum in IREN’s AI Cloud Business, which increased 136.9% on a sequential basis to $17.3 million in the second quarter of fiscal 2026, up from prior quarter’s $7.3 million.

IREN’s focus on no longer being a pure-play crypto-mining company while evolving into an AI Cloud Service Provider seems to bode well for the company’s prospects. Currently, IREN has an opportunity to capitalize on the emerging AI space as the need for AI compute infrastructure, which is witnessing a CAGR of 23.8%, per a report by MarketsAndMarkets, growing much faster than the crypto mining market.

Strong Momentum in AI Cloud Boosts IREN’s Prospects

IREN is aiming to reach $3.4 billion in annualized run-rate revenues (ARR) by the end of calendar 2026, mainly from its AI cloud business. In the second quarter of fiscal 2026, IREN reported around $2.3 billion of ARR under contract, which includes its large AI cloud agreement with Microsoft MSFT and about $0.4-$0.5 billion of ARR from the Prince George site. Here, the management expects Prince George’s revenues to increase as the remaining capacity is finalized.

In the second quarter of fiscal 2026, IREN secured $3.6 billion in GPU financing and received $1.9 billion from Microsoft in customer prepayments, which together cover about 95% of the GPU-related capital spending tied to the Microsoft contract. Management said this reduces risk and allows the company to focus on adding more customers.

Another positive is power availability. In the second quarter of fiscal 2026, IREN stated that it has more than 4.5 gigawatts (GW) of secured power, which management said is hard to find in the current data center market and reaching its $3.4 billion ARR target by the end of calendar 2026 would use only about 10% of this power. This means most of the power capacity is still available for future growth. This gives IREN room to add more AI customers over time.

IREN added new power capacity during the second quarter. The company secured a 1.6-gigawatt site in Oklahoma, which increased its total secured power base and expanded its U.S. footprint. Management said this site is well-suited for large AI customers and helps support long-term expansion plans. Overall, the above-mentioned shows that the company remains well-positioned to deploy around 140,000 GPUs by the end of calendar 2026, which should support the company's goal to reach the $3.4 billion ARR target by the end of calendar 2026.

The Zacks Consensus Estimate for IREN's fiscal 2026 revenues is pegged at $1.08 billion, suggesting a year-over-year increase of 112.8%. The Zacks Consensus Estimate for IREN's fiscal 2027 revenues is pegged at $2.78 billion, indicating a year-over-year increase of 156.2%.

IREN Stock Faces Stiff Competition

IREN faces intense competition from Applied Digital APLD and TeraWulf WULF in the AI infrastructure space. While the AI data center market provides a strong growth outlook, solid competition from already-established players such as Applied Digital and TeraWulf multiplies competition for IREN.

In January 2026, Applied Digital announced that it had started construction on Delta Forge 1, a large AI data center campus in a southern U.S. state. Delta Forge 1 is designed to support up to 430 megawatts (MW) of total utility power in its initial phase. This can support up to 300 MW of critical IT load. The campus is built to expand further starting in 2028, depending on demand. The goal is to turn available power into usable, high-density AI capacity for large customers. Applied Digital's buildout of Delta Forge 1 is designed to scale with customer demand while providing reliable performance. Initial operations at Delta Forge 1 are expected to begin in mid-2027.

In February 2026, TeraWulf announced the expansion of its digital and power infrastructure portfolio through the acquisition of two existing sites in Kentucky and Maryland. Together, these two acquisitions add about 1.5 GW of power capacity to the company’s portfolio. With these additions, TeraWulf’s total platform size increases to about 2.8 GW across five sites. The company plans to add 250 to 500 MW of new contracted capacity each year, depending on customer demand and power availability. These acquisitions support TeraWulf’s strategy of reusing existing energy infrastructure to meet growing power and computing demand.

IREN Limited’s shares have plunged 30.5% over the past three months, underperforming the industry’s decline of 17.3%. The stock has underperformed peers such as Applied Digital and TeraWulf. Over the past three months, shares of Applied Digital have surged 11.1%, while TeraWulf shares have lost 0.1%.

3-Month Price Return Performance

Valuation: IREN Trades Above Industry at Present

IREN shares are overvalued, as suggested by the Value Score of F. In terms of forward price/sales, IREN is trading at 5.6X compared with the Zacks Financial Miscellaneous Services industry’s 3.02X.

IREN Forward 12 Months (P/S) Valuation Chart

Conclusion: Hold IREN Stock Right Now

IREN’s focus on moving into AI cloud services is showing good early results, and the company has strong contracts, funding support, and enough power capacity to grow over time. However, competition in the AI infrastructure space is high, the stock has lagged its peers recently, and a premium valuation warrants a cautious approach to the stock.

Currently, IREN carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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