Iren Ltd. (NASDAQ:IREN) has been transitioning itself from being a Bitcoin miner into a major neocloud provider. The company has been leveraging its massive power infrastructure to provide AI cloud compute for tech giants such as NVIDIA Corporation (NASDAQ:NVDA) and Microsoft Corporation (NASDAQ:MSFT). No wonder one Wall Street firm believes compute scarcity and higher prices could validate the company’s capex-heavy neo-cloud strategy.
On August 13, Bernstein SocGen Group analyst Gautam Chhugani reiterated an Outperform rating on IREN with a $100.00 price target. This target implies roughly 120% upside from current levels.
Why Bernstein thinks IREN Made the Right Bet
Wall Street has been skeptical of IREN turning from a Bitcoin miner into a neocloud provider. Bernstein has acknowledged this categorical bias, noting that it suffers from a technological gap.
However, IREN hasn’t gone the traditional pathway of pursuing a relatively capex-light colocation model. Instead, it has chosen to invest heavily in its own cloud infrastructure, which is what makes it stand out. A colocation model involves a company developing the data center, securing power, and providing the infrastructure.
The customer then signs a lease and installs its own GPUs. Since the operator offers the powered data center capacity rather than underlying compute, it generates significantly less revenue per MW.
IREN’s cloud model differs since it owns the GPUs and sells computing capacity directly to customers, allowing it to capture more revenue from the underlying capacity.
The 5-10x Cloud Advantage
Bernstein believes that IREN has made a smart choice provided it operates in a compute-scarce environment. It noted how a neocloud operation could generate around $10 to $20 million per MW, compared to just $2 to $2.5 million per MW through the colocation leasing model.
This represents an estimated 5-10 times more dollars per MW.
The Wall Street firm also believes that IREN has got what it takes to move up the cloud model’s value curve over time. This would allow the company to capture more of the economics related to AI compute.
This thesis just received a major boost, with Microsoft (NASDAQ:MSFT) formally accepting the Horizon 1 data center handoff at Childress, Texas. Horizon 1 is a 50MW critical IT load AI cloud deployment that is made with direct-to-chip liquid cooling and NVIDIA GB300 NVL72 systems. The company also achieved NVIDIA (NASDAQ:NVDA)’s “Exemplar Cloud” status, proving that IREN is building the capabilities needed to move higher up the chain.
Execution Risks Remain
As previously discussed, Bernstein has also noted how IREN suffers from a technology gap. IREN still has to prove itself that it can compete effectively with more established cloud operators.
Since it operates on a capex-heavy model, the economics becomes much less attractive in the case that compute scarcity eases, pricing declines, or there are utilization problems.
The upcoming earnings, therefore, will be an important benchmark in determining whether operating trends have begun to validate its strategy.
Hedge Fund Analysis
Insider Monkey’s database shows 53 hedge funds held the stock at the end of the first quarter of 2026, up from 46 in the previous quarter. Moreover, as July 31, 2026, the stock had a short interest of 98.22 million shares sold short, representing around 28.94% of the public float. This figure is reflective of significant bearish positioning against the stock.
Overall, Bernstein’s $100 thesis rests on whether the company can turn roughly 5-10x more revenue per MW than the colocation model. The company’s heavy spending is justified if it can. Otherwise, its bull case becomes its biggest risk.
While we acknowledge the risk and potential of IREN as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than IREN and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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