IREN's Price-to-Sales ratio reaches as high as 24.12: Is it time to buy, sell, or hold?

The stock price of IREN Limited closed at $46.03 on January 9th. The company is undergoing a strategic transformation from Bitcoin mining to AI cloud services, which has also sparked widespread market debate over its valuation.

According to Nasdaq analysis, IREN’s price-to-sales ratio is as high as 24.12x, significantly exceeding the industry average of 3.14x in the financial services sector and the overall financial sector average of 7.22x.

01 Business Transformation

IREN Limited is much more than a traditional Bitcoin mining company. Headquartered in Sydney, this company operates a vertically integrated data center business network across Australia and Canada.

The company owns and operates computing hardware, power infrastructure, and data centers, while maintaining Bitcoin mining operations. This dual business model provides a unique market positioning.

In November 2024, the company officially renamed itself from Iris Energy Limited to IREN Limited, marking a shift in its strategic focus. Now, IREN is reshaping itself as a key supplier of AI cloud infrastructure.

02 Valuation Analysis

From a purely valuation perspective, IREN is clearly not cheap. Besides the 24.12x price-to-sales ratio, the company’s other valuation metrics are also significantly above industry averages.

The current P/E ratio is 26.45x, and the enterprise value-to-revenue ratio is as high as 21.85. These figures collectively paint a picture of a high-growth, high-expectation market.

Compared to industry averages, IREN’s valuation multiples stand out:

03 Growth Outlook

Supporting IREN’s high valuation is its massive AI cloud expansion plan. The company aims to expand its GPU clusters from approximately 23,000 units to about 140,000 GPUs by the end of 2026.

This expansion is expected to support an annualized recurring revenue target of $3.4 billion from AI cloud services. The $9.7 billion five-year AI cloud contract signed with Microsoft provides a key anchor for this strategy.

Once fully implemented, this contract is expected to contribute approximately $1.9 billion in annualized recurring revenue for IREN. Phased deployment and 20% customer prepayments reduce short-term funding risks.

The company’s existing 23,000 GPUs are projected to generate about $500 million in annualized recurring revenue, while the planned 40,000 GPUs at Mackenzie and Canal Flats parks could further bring in a potential $1 billion in annualized recurring revenue.

04 Financial Perspective

According to the latest financial data, IREN’s market capitalization has reached $15.114 billion. The past twelve months’ revenue was $685.55 million, with net profit of $523.26 million.

The company’s profit margin is 75.99%, and return on equity is 26.12%. Notably, net income includes a significant portion of “unrealized valuation gains.”

This accounting gain may distort the company’s true profitability, so investors should pay more attention to EBITDA, operating cash flow, and the speed at which capital expenditures consume cash.

05 Risk Considerations

High capital intensity is a major long-term challenge for IREN’s expansion into AI cloud services. Just the GPU capital expenditure for Microsoft’s AI cloud deal requires $5.8 billion.

Even after securing 20% customer prepayments, the company still needs to raise construction funds through various means such as cash, operating cash flow, GPU-backed financing, equity, convertible notes, and corporate debt.

Operational risks continue to pressure profitability visibility. IREN is still in the early stages of building AI cloud and high-performance computing infrastructure and operates in a rapidly evolving market. Achieving the $3.4 billion annualized recurring revenue target by the end of 2026 depends on timely construction, energization, GPU delivery, and debugging across multiple sites.

06 Market Performance

Over the past year, IREN’s stock performance has been remarkable, soaring 336.8%, significantly outperforming the 8.6% decline in the industry and the 18.9% growth in the overall sector.

The stock has also outperformed major AI data center and cloud peers such as Applied Digital, Cipher Mining, and CleanSpark. During the same period, Applied Digital and Cipher Mining surged 247.6% and 247.3%, respectively, while CleanSpark’s growth was relatively modest at 18.8%.

This peer group shares a common strategic direction: shifting from cryptocurrency mining to AI and high-performance computing infrastructure. Although Applied Digital and Cipher Mining have made significant progress in securing AI-related capacity and contracts, CleanSpark remains in an earlier stage of transformation.

IREN’s stock price has been rising amid investor optimism about the successful execution of its high-growth AI strategy and channel expansion. In a market with increasing capacity constraints, long-term mega-contracts and a vertically integrated data center model provide revenue visibility.

From a technical analysis perspective, IREN Limited’s trading price is below its 50-day moving average, reflecting a bearish momentum and indicating limited upside potential in the short term.

Future Outlook

IREN’s story is far from over. Investors following this stock on platforms like Gate are witnessing a battle between traditional energy and the digital future.

The accelerated development of Childress Park Horizons 1-4 and the design work for Horizons 5-10 support the potential to convert the entire 750 MW park into liquid-cooled AI deployment. The 2 GW Sweetwater center, with its initial substation energization targeted for April 2026, provides a scalable platform.

Even with an expansion to 140,000 GPUs, it would only require about 460 MW, roughly 16% of IREN’s already secured grid-connected power of approximately 3 GW, leaving significant room for long-term growth beyond 2026.

The market has already made its judgment—the future value of IREN is partly reflected in its current high valuation. For investors willing to accept the risks of transformation, every price correction could be an opportunity to reassess entry points.