IREN Stock Forecast: Meta Is Now a Compute Competitor; $42 in a Descending Channel

In the wake of reports that Meta is looking to sell some of its excess AI computing capacity, another possibility for artificial intelligence cloud infrastructure providers has emerged: competition. Unlike smaller competitors, Meta already possesses one of the largest networks of AI computing infrastructure in the world. If there is excess capacity to sell, the supply of AI computing services could increase and lead to more price competition in the sector.

In addition to IREN's ability to generate revenues from its business customers, investors are also focused on how much the company will be able to make on each sale. If AI compute prices were to fall because Meta is offering some capacity for resale, it could make it much harder for IREN to achieve the goals it set out at the start of the year. IREN plans to increase its fleet from 23,000 to 140,000 GPUs by the end of 2026, and it intends to increase contracted ARR to $3.4 billion.

Separately, Bernstein also mentioned that IREN isn't as advanced as some of its peers in building a business outside of Microsoft. Microsoft will continue to be a long-term customer, but investors remain eager to see how quickly IREN can grow its client base.

In the meantime, IREN has appointed Kambiz Aghili as Chief Product Officer and Michael Nudelman as Chief Data Officer. Both hires are aimed at accelerating product development and expanding the company's customer base.

For starters, the 9.7 billion dollar Microsoft agreement accounts for much of IREN's growth prospects. At full capacity, management projects that Microsoft will be the source of roughly 1.9 billion dollars in annual recurring revenue, making this one of the largest agreements for contracted AI infrastructure among new cloud providers.

IREN also acquired financing to help build its GPU fleet, with 3.6 billion dollars in GPU loans at interest rates of less than 6% and 3 billion dollars of convertible debt issued at the start of this year. The additional financing sources help reduce the risk of financing IREN's expansion to 140,000 GPUs.

IREN's AI Cloud Services revenue rose to $17.3 million in the most recent period, with adjusted EBITDA on the path to profitability once AI infrastructure represents a larger portion of the company. IREN's next data center campus, located in Oklahoma, is expected to come online soon and help fuel future growth.

Next week's earnings report on September 16 will reveal updated results for GPUs installed, customer additions, and ARR progress for IREN.

The 4H chart shows IREN at $42.52, declining from a double top resistance at $46.23 to $46.50 within the downward sloping channel. Red candles indicate strong bearish dominance and the Relative Strength Index (RSI) sits at 46.59.

IREN Stock Price Chart - Source: Tradingview

There is strong support at $40.82 to $37.70. Short positions under $40.80 would seek a retest of $37.70. Stop loss at $46.20 above. A breakout below $37.70 could extend to $34.29.

• Short entry:  Below $40.80 ( Driven by double top breakdown confirmed)
• Target:  $37.70 (Channel continuation)
• Stop Loss:  Close above $46.20 (Double top reclaimed)
• Meta risk:  Meta signalling resale of excess AI compute = neocloud pricing pressure
• Microsoft deal:  $9.7B contract, $1.9B ARR. GPU fleet: 23K → 140K by end-2026, $3.4B ARR
• Analyst target:  13 analysts Buy, avg $76.23 (+79%). Next earnings: Sept 16

IREN dipped after headlines claimed Meta might start offering additional AI compute power for external sale, which some analysts saw as a threat to future competition in the AI cloud marketplace. The selloff was compounded by a Bernstein study claiming IREN is still catching up to rivals on expanding its enterprise client pool outside of Microsoft.

By the time the full deployment is complete, IREN estimates it will be generating $1.9 billion in ARR. IREN intends to grow its GPU inventory from 23,000 to 140,000 GPUs by the end of 2026, with $3.6 billion in GPU financing and convertible notes raising additional funds.

Analysts' $76.23 price target continues to reflect expectations for continued Microsoft deployment, increased GPU supply, and ARR growth. The stock's most recent weakness instead reflects concerns about future competition and execution, rather than any changes to the company's contracts.

IREN shares are under pressure as investors consider the potential competitive effects of Meta's plans as well as the company's ability to expand its enterprise customer pool. While IREN remains on strong footing thanks to its $9.7 billion Microsoft agreement, its planned expansion to 140,000 GPUs, and ARR target of $3.4 billion, the stock is still trading below the key resistance level of $46.20. A drop below $40.80 may lead to $37.70, while a breakout above $46.20 might help improve the case for bulls. The September 16 earnings report will be the next big event to watch.