Iris Energy Shares Pull Back Following Recent Rally

Shares of Iris Energy (IREN) declined by 5.5% on Friday, closing at $40.30. This retreat comes after the stock had advanced approximately 9% during the prior week. Investor sentiment appears mixed as the company executes a strategic pivot from a pure-play Bitcoin miner to a provider of infrastructure for artificial intelligence.

The core of the company's transformation involves expanding into AI cloud services. A significant development is the recent signing of multi-year contracts with new clients, including Together AI, Fluidstack, and Fireworks AI. These partnerships serve a dual purpose: they represent a prestige win and, crucially, diversify the company's revenue base away from a heavy reliance on its major existing customer, Microsoft.

Iris Energy's landmark $9.7 billion agreement with Microsoft remains a cornerstone. However, the newer deals are projected to contribute over $500 million in annual recurring revenue starting in early 2026. This influx is timed to provide a vital cash flow bridge before the full-scale Microsoft infrastructure is fully operational. For a firm that needs to secure roughly $2.7 billion to fund its complete expansion, such early-stage revenue is critical.

Market reaction to this news was muted, with the Friday dip suggesting investors used the positive update as an opportunity to realize some profits after the strong weekly performance. Trading volume of 20 million shares remained below the 30-day average of 31 million, indicating the selling pressure was likely driven by tactical portfolio adjustments rather than large-scale institutional exits.

Should investors sell immediately? Or is it worth buying IREN?

Navigating Dual High-Growth Markets

Iris Energy now operates simultaneously in two notoriously volatile sectors. Its established Bitcoin mining business continues to perform robustly, reporting record revenue of $240 million for the first quarter of fiscal 2026—its fifth consecutive record quarter.

In parallel, the company is aggressively building out high-performance data centers designed for AI workloads. This dual-strategy has propelled the equity to a gain of nearly 296% since the start of the year, albeit from a depressed base. The stock's 52-week high of $66.51, reached in November, still sits 39% above the current price level.

Analyst perspectives on this journey are divided. This week, Wall Street Zen downgraded the stock to a "Sell" rating, citing its rapid valuation expansion. In contrast, firms like Arete Research maintain a bullish outlook, highlighting Iris Energy's available power capacity and its portfolio of shovel-ready data center sites as key competitive advantages.

Looking Ahead to Key Milestones

The market's next focal point will be the release of the company's Q2 FY2026 results, scheduled for February 18. In the interim, investor attention will center on the progress of GPU installation and deployment. From a technical analysis perspective, the shares are consolidating; the $40 level is viewed as a key psychological support zone, while a sustained break above $45 could signal the resumption of upward momentum.