IREN stock fell sharply on Aug. 28 after the AI infrastructure and Bitcoin-mining company reported mixed fiscal fourth-quarter results. Shares dropped roughly 13% toward $35 during Friday trading, after closing at $40.53 on Thursday.

The selloff came even as IREN reached an important milestone in its transition toward AI cloud infrastructure: for the first time, AI cloud services generated more quarterly revenue than Bitcoin mining. However, weak adjusted EBITDA and large impairment charges overshadowed the revenue shift. For a company funding a capital-intensive buildout largely with debt, profitability metrics matter to investors because they signal how much additional financing the company may need before AI contracts translate into sustained earnings.

AI Revenue Milestone

IREN stock continued its recent downward trend, reaching its lowest level in a month after the earnings report was published. The report showed the company achieved a major milestone as it transitions from a pure Bitcoin mining firm into an AI data center operator. That pivot mirrors a broader industry trend, as several Bitcoin miners have redirected power infrastructure and capital toward hosting AI workloads, which offer longer-term contracted revenue compared with volatile mining income.

IREN's AI cloud services revenue soared from $33.6 million in the second quarter of last year to $70.5 million. That figure was well above the $66.7 million generated by its Bitcoin mining operation. Mining revenue declined because of the crypto winter, which pushed BTC to its lowest level in over a year.

The company also continued to scale back mining operations as it replaced miners with AI servers and GPUs.

IREN has become a major player in the AI space, attracting the attention of Nvidia. In a recent statement, Nvidia said it invested $2 billion in the company and is now one of its biggest shareholders. Nvidia also committed to leasing IREN's spare capacity. Backing from a leading GPU supplier is a significant asset in this sector, since access to high-end chips is a key constraint on expanding AI cloud capacity.

In its earnings report, IREN said it had nearly sold out its capacity for the year, with demand remaining elevated. Just this week, Anthropic reached a $46 billion deal with Nscale, a top competitor in the industry, underscoring the strength of demand in the sector.

IREN has secured several deals, with the Microsoft agreement being its biggest: Microsoft will pay it $9.3 billion as part of the partnership. Most recently, it signed a $2.8 billion deal with several AI labs, including Perplexity, Cohere, and Figure AI.

As a result, revenue growth is expected to continue. Yahoo Finance data shows analysts expect annual revenue to jump by 40% to $718 million, and then by 312% to over $2 billion in the next financial year.

Shares Dropped Amid Key Concerns

There are several important reasons why IREN stock dropped after its earnings report.

First, the company posted a large loss during the quarter. Its net loss widened to $684 million, from the $247 million lost in the same period last year.

Second, the company's debt continues to grow as deployment costs rise. Its debt climbed to over $7.4 billion. In a new report, the company said it had signed a $2.4 billion debt deal with Blue Owl, one of the top players in the private credit industry. Of this, $1.2 billion will be a senior-secured term loan, while the remainder will be in senior-secured notes. Rising leverage against still-widening losses is a key tension in the story, and future quarters will show whether contracted AI revenue can outpace debt service and deployment costs.

Third, the company operates in a highly competitive industry, with companies such as Lambda, Riot Platforms, and SpaceX entering the sector.

Stock Price Analysis

The daily chart shows that the IREN share price peaked at $49.22 on August 13. It formed a shooting star candlestick pattern, which helps explain the slide of the past few days. The stock dropped below the 50-day EMA, while the Relative Strength Index (RSI) has fallen below 50 and is pointing downward. These technicals suggest that bears remain in control for now, with the next key target to watch at $29. Looking further ahead, the article identifies key resistance at $77, the stock's highest point this year.

This article is for informational purposes only and does not constitute financial advice. Equity and cryptocurrency markets can experience sharp price movements.