J.P. Morgan maintained an ‘Underweight’ rating on IREN (NASDAQ: IREN) Friday, cautioning that the company faces a significant funding gap despite a recent massive debt deal.
The bank estimates a remaining financing need of approximately $1.7 billion over the next 10 months to meet aggressive infrastructure targets.
Analysts highlight that the capital intensity of the transition to AI/HPC keeps the risk profile elevated. This view persists even after the company secured $3.6 billion in debt financing at an interest rate of less than 6%.
IREN held $2.8 billion in cash on hand as of Friday.
To hit the year-end 2026 target of 140,000 installed GPUs, the company requires substantial additional capital allocation, J.P. Morgan noted. Analysts calculate approximately $3 billion in cash is needed for the 200 MW campus build-out related to the Microsoft contract.
An additional $2 billion is required to acquire 40,000 GPUs for deployment in Canada. The bank also noted that $220 million is earmarked for upgrades at the Canal Flats and Mackenzie data centers.
Meanwhile, Bitcoin mining revenue declined to $167 million from $233 million in the prior quarter. The average hashrate fell to 43.0 EH/s from 45.3 EH/s in the previous period. Fewer BTC mined and a quarter-over-quarter drop in the price of the cryptocurrency further exacerbated the revenue dip.
This softening in the legacy mining business puts more pressure on the AI/HPC pivot to deliver immediate value, the bank noted. However, Cloud Services revenue did double to $17 million over the quarter, a silver lining.
Management confirmed that all energized GPUs are currently under contract. Executives stated that “demand is not a constraint” as they proceed with advanced negotiations with multiple cloud customers.
