Summary IREN just posted record profits while quietly amassing one of the largest GPU fleets in the industry - is this Bitcoin miner the AI market’s dark horse? With crypto cash funding AI infrastructure, does IREN hold the rare advantage that could let it outlast competitors when the bubble bursts? And AI really is in a bubble; who survives when it pops - and could IREN be the unexpected winner that investors are missing? I remain bullish on IREN's long-term prospects as a disruptive AI infrastructure leader, uniquely positioned for sustainable growth. Thesis Summary IREN Limited (IREN) used to be known as one of the larger publicly traded Bitcoin (BTC-USD) miners. However, the company has been pivoting towards AI data centers, and the move is so far paying off nicely, up over 200% in the last year. Investors are excited about the prospects of the AI data center business while also rewarding the fact that IREN is bringing in serious cash from its Bitcoin business. AI demand is still projected to keep increasing, and Bitcoin could also do very well in the months to come, as both will be helped by the coming rate-cutting cycle. Nonetheless, the AI data center segment is incredibly competitive, and there's certainly evidence to suggest that there's overinvestment going on. But that doesn't change the fact that AI is transformative, and demand will catch up in the long term. Even if there is a cyclical AI recession, IREN is positioned to weather the storm and will ultimately come out a winner over the coming decade. Q4 Results IREN's fourth quarter of 2025 was a turning point. The company reported $187.3 million in revenue and $176.9 million in net income, smashing expectations and highlighting the profitability of its existing crypto mining operations. Q4 Results (Investor Presentation) Margins widened meaningfully as efficiency gains flowed through the income statement, and this was rewarded by investors. On top of that, IREN confirmed the purchase of 4,200 NVIDIA ( NVDA ) B200 GPUs, which brings its price up to 8,500. IREN is now also a preferred partner of Nvidia. GPU expansion (Investor Presentation) According to IREN, the AI segment could reach $250 million in annualised revenue by the end of the year. In Texas, IREN is developing a 2 GW data center hub, including its 75 MW liquid-cooled AI campus at HorizonOne. Data Center Capacity (Investor Presentation) Ultimately, IREN is getting ready to really invest aggressively in the AI data center business. Will this pay off? Why the Market Likes IREN If you ask me, there are three reasons IREN has exploded higher after earnings; Diversification Credibility Growth Outlook The whole data center business requires money up front, and it also comes with high depreciation levels. The great thing about IREN is that it has a highly profitable Bitcoin business to support these investments without the need to find outside financing. This is similar to Nebius (NBIS), which I have also talked about before . For now, crypto remains the dominant revenue driver, but by the end of 2025, the company expects AI services to bring in $200-250 million annually. This is the clear growth path that the company has laid out, and investors like it. And lastly, Nvidia's embrace of IREN as a preferred partner matters. In a world where access to GPUs is one of the biggest bottlenecks for building AI capacity, being tied to the leading chipmaker signals that IREN is not a marginal player but a serious contender. Put simply, IREN offers something rare in today's market: a profitable crypto miner that is actively transforming into an AI infrastructure provider, with a green energy narrative layered on top. That combination has fueled the stock's sharp rally following the earnings release. Is There An AI Bubble? This is the burning question that investors have to contend with. There are gains to be made in stocks like IREN, Nebius, or CoreWeave (CRWV). But it's undeniable that it looks like we are getting into overinvestment and bubble territory, A recent article in Futurism lays out the math presented by Praetorian Capital CIO Harris Kupperman nicely and makes a compelling case that there could be a bubble. The finance guru estimates that the "AI datacenters to be built in 2025 will suffer $40 billion of annual depreciation, while generating somewhere between $15 and $20 billion of revenue." Source: Futurism.com Ultimately, he reaches the conclusion that in order to justify the investment right now, AI companies would have to charge Netflix ( NFLX )-priced subscriptions to over 3 billion users. For context, Kupperman notes that Netflix brings in just $39 billion in annual revenue from its 300 million subscribers. If AI companies charged Netflix prices for their software, they'd need to field over 3.69 billion paying customers to make a standard profit on data center spending alone - almost half the people on the planet. Source: Futurism.com I don't disagree that there may be overinvestment. This is common in many industries and is part of the natural cycle of discovery. I Still Like IREN My bullish outlook on IREN hinges on three factors. AI will be more disruptive than the Internet. IREN will be able to weather the storm thanks to its Bitcoin revenue Even if there is a pullback in spending from here, the long-term story with AI doesn't change. This is transformative technology that will touch every industry. If we do see a CAPEX recession, so to speak, then many companies could go under, but I don't think IREN will be one of them, and this will ultimately benefit the company. With a strong balance sheet, positive cash flow from Bitcoin, which I am also bullish on, and the right partner in Nvidia, IREN is set up for long-term success. Final Thoughts A year ago, few would have imagined a Bitcoin miner rebranding itself into a green energy-powered AI infrastructure firm with a direct relationship with Nvidia. Yet here we are, with record quarterly profits, a swelling GPU fleet, and multi-billion-dollar data center projects underway. There are many risks with investing in this sector, but I believe IREN is positioned to be a long-term winner in the AI market, not just a passing fancy.
