IREN Aims for $3.4B AI Cloud ARR by 2026: Can it Hit the Target?

IREN Limited IREN is aiming to reach $3.4 billion in annualized run-rate revenues (ARR) by the end of 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 and about $0.4-$0.5 billion of ARR from the Prince George site. This shows that the company already has a strong base to start from.

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 2026 would use only about 10% of this power. This means most of the power capacity is still available for future growth, which should support the company’s plans to deploy around 140,000 GPUs by the end of 2026.

The above-mentioned shows that the company remains well-positioned to reach the $3.4 billion ARR target by the end of 2026. The Zacks Consensus Estimate for IREN's fiscal 2026 revenues is pegged at $1.01 billion, suggesting a year-over-year increase of 98.6%. The Zacks Consensus Estimate for IREN's fiscal 2027 revenues is pegged at $2.76 billion, indicating a year-over-year increase of 172.6%.

IREN Stock Faces Stiff Competition

IREN faces intense competition from Applied Digital APLD and TeraWulf WULF in the AI infrastructure space.

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 goal is to turn available power into usable, high-density AI capacity for large customers.

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. These acquisitions support TeraWulf’s strategy of reusing existing energy infrastructure to meet growing power and computing demand.

IREN’s Price Performance, Valuation & Estimates

Shares of IREN have surged 142.5% in the past six months, outperforming the Zacks Financial Miscellaneous Services industry’s decline of 23.4%.

IREN 6-Month Price Performance

IREN shares are overvalued, as suggested by the Value Score of F. In terms of forward price/sales, IREN is trading at 6.15X compared with the industry’s 2.82X.

IREN Forward 12 Months (P/S) Valuation

The Zacks Consensus Estimate for IREN’s fiscal 2026 earnings is pegged at 58 cents per share, down by 9 cents over the past seven days, but marking a substantial year-over-year increase.

Currently, IREN carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research