If I Could Only Own 1 Artificial Intelligence (AI) Stock Through the Next Bubble Scare, It Would Be This One
Key PointsCoreWeave may face higher borrowing costs when it refinances; Gartner anticipates 80% of neoclouds will go under by 2030, and that's all good news for Iren.
If I could only invest in a single artificial intelligence (AI) stock during a potential market downturn, Iren (IREN -11.19%) would be my choice. The company is currently trading at a low price, which presents an opportunity for further investment. Several bullish factors support Iren's long-term prospects, despite common bearish claims.
Gartner's research indicates that 80% of neocloud providers might cease independent operations by 2030, suggesting supply constraints that could make Iren's assets more valuable. CoreWeave's (CRWV -11.91%) high corporate bond yields, at 15%, have raised concerns about borrowing costs for neocloud providers. However, CoreWeave's underperforming balance sheet contrasts with Iren's more favorable current ratio of 3.55, which signals a stronger financial position.
Iren's balance sheets are much healthier than its competitors, giving the company more negotiating power and the ability to charge higher prices for its megawatts. Moreover, Iren has access to low-cost capital through GPU financing and using its data centers as collateral.
The company's pipeline remains robust, with a 5.8-gigawatt capacity, and demand for AI services continues to surge. Iren is also in discussions for approximately $25 million per megawatt, with customer prepayments covering 45% to 55% of GPU capital expenditures. The company projects to deliver 300 megawatts by 2026 and 800 megawatts by the end of 2027, including undisclosed sites that have not yet been counted in its publicly announced pipeline.
Long-term growth catalysts remain intact, as Iren aims for $4 billion in annual recurring revenue by the end of the year. Upcoming earnings reports from major tech companies, such as Meta Platforms, Tesla, Alphabet, Microsoft, and Amazon, will provide further insight into AI spending trends. Chipmakers, like Micron and Taiwan Semiconductor, have reported strong earnings and expect robust demand for AI-related chips, indicating potential capital inflows into Iren's business.
Written by urgent.news from Motley Fool's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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