Can IREN Sustain Growth Amid Its Rapidly Mounting Capex Burden?

IREN Limited’s IREN shift toward AI cloud infrastructure boosts long-term prospects while sharply increasing capital intensity. The company has highlighted massive capital needs that will significantly impact its long-term financial trajectory.IREN plans to deploy 140,000 GPUs by 2026 and upgrade multiple sites with liquid cooling, Tier-3 standards and high-density rack infrastructure. These initiatives span several years and involve multibillion-dollar investments. The Microsoft partnership alone requires $5.8 billion in GPU capital expenditure, while extensive build-outs at Childress (750 MW), British Columbia and the 2 GW Sweetwater hub further increase spending needs.This rapid scaling has pushed capex far beyond internally generated cash. In the first quarter of fiscal 2026, IREN reported a strong operating cash flow of $142.4 million; however, investing outflows totalled $280.9 million. Heavy spending on property and equipment ($180.3 million) and GPU prepayments (over $100 million) underscores the persistent capital strain. To bridge the gap, the company increasingly depends on external financing, including Microsoft prepayments, GPU funding facilities and $1.0 billion in convertible note issuance.Despite these challenges, the growth potential is attractive. The Zacks Consensus Estimate forecasts 116.4% revenue growth in 2026, reaching $1.10 billion — an indication that rising AI demand may ultimately justify the upfront investment. With specific implementation, current capital expenditure growth can develop into a strong foundation for future AI cloud profitability.How IREN Compares With Key Industry RivalsCleanSpark CLSK and Applied Digital APLD are key competitors making significant CapEx investments in AI infrastructure & High-Performance Computing (HPC).CleanSpark is using its energy, land and management expertise to build AI/HPC-ready campuses with liquid-cooled, GPU-optimized infrastructure. Unlike IREN, CleanSpark stands out for its rapid commercial implementation, strong fiscal year 2025 revenue growth, a large contracted power pipeline and $1.15 billion in targeted capital activities. The company benefits from proven site development and energy management, although leverage and integration risks remain. Overall, CleanSpark's diversified, infrastructure-first strategy contrasts with IREN's concentrated AI hardware approach.Applied Digital has repositioned itself from crypto hosting to purpose-built AI and HPC data centers, competing directly with IREN for hyperscaler and enterprise GPU workloads. The company designs and operates AI/HPC-first campuses like Polaris Forge, which offer high power density, liquid cooling and scalable layouts. Backed by long-term leases, including a 15-year, $11 billion CoreWeave contract, Applied Digital has distinguished itself from the start with a hyperscaler-focused, energy-efficient infrastructure.IREN’s Price Performance, Valuation & EstimatesShares of IREN have soared 188.5% in the past year, outperforming the broader Zacks Finance sector’s return of 13.7% and the Zacks Financial Miscellaneous Services industry’s decline of 12%.IREN’s One-Year Price PerformanceImage Source: Zacks Investment ResearchIREN shares are overvalued, as suggested by the Value Score of F. In terms of forward price/sales, IREN is trading at 6.78X compared with the industry’s 3.36X.IREN’s ValuationImage Source: Zacks Investment ResearchThe Zacks Consensus Estimate for IREN’s fiscal 2026 earnings is pegged at 79 cents per share, marking a sharp year-over-year improvement from just 4 cents. However, the fiscal 2027 earnings estimate of 34 cents indicates a year-over-year decline of 56.33%. Notably, consensus estimates for both fiscal 2026 and 2027 have remained unchanged over the past 30 days, indicating stable near-term expectations.Image Source: Zacks Investment ResearchIREN currently has a Zacks Rank #5 (Strong Sell).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the favorite stock to gain +100% or more in the months ahead. They includeStock #1: A Disruptive Force with Notable Growth and ResilienceStock #2: Bullish Signs Signaling to Buy the DipStock #3: One of the Most Compelling Investments in the MarketStock #4: Leader In a Red-Hot Industry Poised for GrowthStock #5: Modern Omni-Channel Platform Coiled to SpringMost of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor. While not all picks can be winners, previous recommendations have soared +171%, +209% and +232%.Download Atomic Opportunity: Nuclear Energy's Comeback free today.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Applied Digital Corporation (APLD): Free Stock Analysis Report Cleanspark, Inc. (CLSK): Free Stock Analysis Report IREN Limited (IREN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks