Down 40% in the Past Month, Morgan Stanley Says This 1 Stock Is Key to the Future of AI

Group 1: AI Computing Power Shortage - Morgan Stanley analysts project a cumulative shortfall of 47 gigawatts of computing power through 2028, highlighting the need for data center infrastructure to support AI development [1] - The next phase of AI investing will focus on companies that can provide the necessary data center infrastructure rather than just those building GPUs [1] Group 2: Iren Limited's Business Model - Iren Limited, an Australian Bitcoin miner, has expanded its offerings to include next-generation data centers and large-scale GPU clusters for AI training and inference [2] - Iren signed a five-year lease with Microsoft for computing power, which Morgan Stanley views as a potentially powerful investment model [2] - The company recently entered a $9.7 billion deal with Microsoft for cloud computing services, utilizing Nvidia GPUs, and has an agreement with Dell Technologies to purchase $5.8 billion worth of GPUs and ancillary equipment [3] Group 3: Iren's Data Center Operations - Iren operates three data centers in Canada and one in Texas, with plans for a second data center in Texas to support the Microsoft deal [4] - The increasing demand for data center capacity has positively impacted Iren's stock, which is up nearly 355% this year despite a recent decline of 40% in the past month [4] Group 4: Valuation and Competitiveness - Iren's stock is considered affordable with a trailing price-to-earnings ratio of 25.2 and a forward P/E of 37.6, which is lower than Nvidia's [5] - Competitors like Nebius Group and CoreWeave, which also provide data center services, are not yet profitable, indicating Iren's competitive edge in the market [5]