IREN Skyrockets 153.1% in 3 months: Buy, Sell or Hold the Stock?

Core Insights - IREN Limited (IREN) shares have surged 153.1% over the past three months, raising questions about whether investors should buy more shares or exit the stock [1][9]. Company Transition and Growth - IREN is transitioning from a crypto-mining company to an AI Cloud Service Provider, capitalizing on the growing demand for AI compute infrastructure, which is projected to grow at a CAGR of 19.4% [4][9]. - The company has secured three gigawatt power sources and partnered with Microsoft to develop a fully integrated AI cloud infrastructure, enhancing scalability and cost efficiency [5][9]. - IREN aims to convert its 160MW infrastructure in British Columbia from ASIC miners to GPU-based AI compute by late 2026 and is developing a 200MW liquid-cooled data center in Childress [6]. Financial Performance - In the first quarter of fiscal 2026, IREN reported a 17% sequential increase in average operating Hash rate, leading to a 12% increase in bitcoin mining output [7]. - Total revenues for IREN in the first quarter of fiscal 2026 were $240.3 billion, with AI data center revenues contributing only $7.3 billion, approximately 3% of total revenues [11]. Challenges and Competition - IREN faces high capital expenditure, with $5.8 billion allocated for GPUs, and relies heavily on external contracts and customer prepayments to fund its expansion [10]. - The company is exposed to crypto market volatility, and its business model is affected by rising utility costs, which increased approximately 52.6% in the first quarter of 2026 [12]. - Intense competition from established players like Applied Digital and TeraWulf, as well as new entrants like CleanSpark, poses additional challenges for IREN in the AI infrastructure space [14][15]. Valuation Concerns - IREN shares are considered overvalued, trading at a forward price/sales ratio of 8.84X compared to the industry average of 3.06X [16]. - The company's lack of diversification and modest earnings growth, combined with rising competition, raises concerns for investors [19].