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IREN Earnings Were Ugly—Is a Beautiful Future Already Funded?
Written by Jeffrey Neal Johnson. Originally Published: 2/6/2026.
Summary
- The company successfully secured a massive credit facility to fully fund its transition to becoming a high-performance computing infrastructure provider.
- IREN has established a competitive moat by securing vast amounts of power capacity and developing new data center campuses across North America.
- Management reaffirmed ambitious annualized recurring revenue targets, driven by the aggressive deployment of new graphics processing units.
Shares of IREN Limited (NASDAQ: IREN) fell sharply on Feb. 5, 2026, closing down more than 11% after the company released its second-quarter financial results. The sell-off intensified in after-hours trading after the company missed revenue estimates and recorded a wider net loss than investors expected. At face value, the results reflected the recent weakness in the cryptocurrency market, where lower Bitcoin prices and higher mining difficulty pressured mining revenue.
But focusing only on the quarterly print misses a pivotal development that materially changes the company's trajectory. Alongside the earnings release, IREN announced a $3.6 billion delayed-draw term loan to support its transition from a pure-play Bitcoin miner to a high-performance computing (HPC) infrastructure provider.
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Almost no one sees it coming, but AI is about to split America into two over the next 12 months. On one hand, it'll make America's one-percenters richer and more powerful than ever. On the other hand, it's set to trap millions of hardworking Americans in financial quicksand. Former Google exec Kai-Fu Lee says AI could wipe out 50% of jobs by 2027. Elon Musk has said AI will surpass human intelligence by 2027. Mark Zuckerberg has said half of all coding could be done by AI within the next year. One ex-hedge fund manager whose team predicted Nvidia's rise in 2020 calls this the AI End Game, and he says there are three critical moves every American should make in the next 12 months to protect and grow their wealth through this paradigm shift.
See the three moves before the AI split happensThat creates a clear disconnect in market sentiment. Short-term attention is focused on the recent crypto headwinds and headline accounting items, while management has just secured near-term funding to execute a multi-year infrastructure build in the artificial intelligence (AI) market. For investors the question is straightforward: trade the last three months of results, or the multi-billion-dollar build-out over the next three years?
The $3.6 Billion Game Changer
The most important takeaway is that IREN has secured a $3.6 billion delayed-draw term loan earmarked to purchase the graphics processing units (GPUs) needed to fulfill its large contracts.
The financing is notable for several reasons:
- Low cost of capital: The facility carries an interest rate below 6%. In today's environment, financing billions at that rate signals meaningful institutional confidence in IREN's credit profile and business plan.
- Linked to Microsoft: Management confirmed the funding is directly tied to the previously announced $9.7 billion AI Cloud contract with Microsoft (NASDAQ: MSFT).
- Limits dilution: Combined with a $1.9 billion prepayment from Microsoft, the new debt facility covers roughly 95% of the capital expenditure needed for the hardware expansion, reducing the need to raise equity and dilute shareholders.
With this financing in place, IREN has moved from a theoretical growth plan to a funded project. The risk has shifted from "can they afford to build it?" to "can they build it on time and to specification?"
Scale and Scarcity: The Infrastructure Advantage
In AI infrastructure, high-end chips are widely available to well-capitalized buyers — the true scarce resource is power. Data centers require massive energy to run and cool these processors, and gaining grid access is increasingly difficult. That is where IREN appears to have a durable advantage.
IREN has accumulated secured power capacity of more than 4.5 gigawatts (GW). To put that in context, one gigawatt is roughly enough to power 750,000 homes. That scale creates a meaningful moat that smaller competitors will struggle to replicate quickly.
Recent infrastructure milestones include:
- New Oklahoma campus: IREN announced a 1.6 GW data center campus in Oklahoma, located in the Southwest Power Pool (SPP). This diversifies the company's footprint beyond the Texas grid (ERCOT) and spreads regulatory and operational risk across different jurisdictions.
- Sweetwater milestone: The Sweetwater 1 substation in Texas, with capacity for 1.4 GW, remains on track to be energized in April 2026.
That timeline matters. While many competitors wait in multi-year queues for power, IREN is months away from powering up a gigawatt-scale facility, allowing it to deploy hardware faster than peers that lack ready-to-use grid capacity.
Bitcoin Headwinds and Accounting Noise
The Q2 results did create near-term headwinds. IREN reported total revenue of $184.7 million, missing analyst expectations near $229.6 million. The shortfall was driven primarily by the Bitcoin mining segment, as lower average Bitcoin prices and increased mining difficulty reduced production revenue.
The company also reported a net loss of $155.4 million. Much of that loss was non-cash: IREN recorded $219.4 million in charges related to derivative revaluations and impairments. Derivative revaluations are accounting adjustments for hedging instruments that can swing with market prices but do not necessarily reflect cash outflows, and impairments reflect write-downs on older mining hardware as the company retires rigs to make room for modern AI processors.
Importantly, IREN's balance sheet remains solid: the company held about $2.8 billion in cash as of Jan. 31, 2026. That liquidity, plus the new debt facility and Microsoft prepayment, suggests the company is not facing an existential cash shortfall. If anything, the earnings volatility highlights why the pivot to fixed-rate AI contracts should reduce the kind of crypto-market swings that affected this quarter.
The Path to Re-Rating
Management reiterated an ambitious goal: achieve $3.4 billion in Annualized Recurring Revenue (ARR) by year-end 2026, a target that depends on deploying roughly 140,000 GPUs across its expanding footprint.
Today, IREN trades with a market capitalization near $11 billion. If the company reaches $3.4 billion in revenue, the stock would be trading at about 3.2 times forward revenue. By comparison, pure-play AI infrastructure companies often trade at double-digit revenue multiples. The market currently prices IREN more like a volatile Bitcoin miner than an AI infrastructure provider. If execution shifts the revenue mix toward stable, high-margin AI cloud services and the market re-rates the company accordingly, the valuation upside could be substantial.
Navigating the Transition
IREN is in the most difficult phase of its transformation: operationally pivoting a large industrial business from one model to another. The recent earnings miss was painful, but the $3.6 billion in low-cost financing removes the single largest financial hurdle. With funding secured, significant power capacity in hand, and a premier customer contracted, the thesis now rests on execution. For investors willing to look past short-term Bitcoin volatility, the growth story for 2026 remains intact — provided management can deliver the infrastructure on schedule and ramp the AI business as planned.
ServiceNow's Massive Fall: Analysts Eye +70% Gains Amid AI Risks
Written by Leo Miller. Originally Published: 2/10/2026.
Summary
- Investors have recently crushed shares of software giant ServiceNow, like many names in its industry.
- However, the firm's 2025 results and 2026 guidance did not show many signs of weakness.
- While the company's AI tools are gaining steam, the technology could also pose a structural risk to NOW's long-term growth.
So far, 2026 has been a rough year for software stocks. The iShares Expanded Tech-Software Sector ETF (BATS: IGV) is a useful proxy for the industry's performance; as of the Feb. 9 close, the fund was down nearly 20% year-to-date.
This steep decline reflects market worries about the rapid emergence of new artificial intelligence (AI) software development tools. Many investors fear that as AI makes software easier to develop, incumbents will face heightened competitive pressure. Yet investors have been selling broadly across the sector, often without distinguishing the true risks faced by individual companies.
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Almost no one sees it coming, but AI is about to split America into two over the next 12 months. On one hand, it'll make America's one-percenters richer and more powerful than ever. On the other hand, it's set to trap millions of hardworking Americans in financial quicksand. Former Google exec Kai-Fu Lee says AI could wipe out 50% of jobs by 2027. Elon Musk has said AI will surpass human intelligence by 2027. Mark Zuckerberg has said half of all coding could be done by AI within the next year. One ex-hedge fund manager whose team predicted Nvidia's rise in 2020 calls this the AI End Game, and he says there are three critical moves every American should make in the next 12 months to protect and grow their wealth through this paradigm shift.
See the three moves before the AI split happensThese indiscriminate sell-offs can create opportunities to buy high-quality names at discounted prices. One software behemoth worth examining is ServiceNow.
Despite posting strong financial results, ServiceNow (NYSE: NOW) saw its shares fall roughly 55% from their all-time high by the second week of February. Below, we break down the positives and negatives to provide an updated perspective on this tech stock.
ServiceNow: 2025 and 2026 Numbers Paint Impressive Picture
ServiceNow delivered a strong 2025 on the financial front. Revenue rose 21%, adjusted operating margin expanded by roughly 150 basis points to just over 31%, and free cash flow increased 34% with a free cash flow margin of 34.5%—more than 300 basis points higher than in 2024.
The company's outlook for 2026 is notable as well. It expects subscription revenue growth between 19.5% and 20%, including a 1% contribution from its Moveworks acquisition. That implies core business growth of roughly 18.5% to 20%—a deceleration from prior years but still robust.
ServiceNow also expects operating and free cash flow margins to expand to about 32% and 36%, respectively, helped by internal AI-driven cost efficiencies. The annual contract value (ACV) for the Now Assist AI agent doubled in Q4 to $600 million, and the company is targeting more than $1 billion in Now Assist ACV in 2026. Overall, these metrics point to near-20% growth and margin expansion.
AI Is a Double-Edged Sword for NOW
Even so, there are reasons for caution. The company expects growth to decelerate despite the rapid adoption of Now Assist, highlighting a key debate about ServiceNow and other incumbents. The primary risk is not that new AI tools will immediately displace ServiceNow—its software is deeply embedded in customer workflows, making near-term replacement unlikely.
The bigger structural concern is how ServiceNow grows revenue: largely by customers adding employees or "seats" to their subscriptions. AI's efficiency gains can enable customers to do the same or more work with fewer people, slowing seat growth and creating a headwind for a seat-based model.
ServiceNow is moving toward more consumption-based pricing—charging, for example, when an AI agent completes a task. That approach can be less predictable and, especially for AI services, introduces higher variable costs (inference costs) that could weigh on long-term margins.
Another risk is the accelerating pace of AI tool releases. Even announcements of new tools have recently been enough to trigger broad sell-offs among software stocks.
Wall Street Sees Huge Upside in NOW
Wall Street analysts remain broadly bullish on ServiceNow. The consensus price target of about $193 implies roughly 86% upside from current levels. The average of targets updated after the latest earnings report is nearer $182, which still implies about 75% upside.
Those concerns are real, but the share price appears overly punitive, creating a potential long-term buying opportunity. That said, additional AI product releases could continue to pressure ServiceNow shares until the company proves the market has overestimated their disruptive impact.
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