Almost every neocloud under pressure has a silver lining: analyst price targets projecting massive upside.
A shoe company pivoting to AI doesn’t make a lot of sense. It’s a different story for Bitcoin miners staring at a long crypto winter. Turning mining farms into data centre infrastructure is big business.
Sydney-based Iren ($IREN) was one of the best performers this week. Shares rallied 20% on Monday after the company announced US$2.8B in new AI deals and raised revenue projections.
Perplexity and Figure AI are Iren’s newest customers, but its biggest contract is still the US$9.7B GPU-cloud deal with tech giant Microsoft ($MSFT). And it's partnered with Dell ($DELL) to fund that buildout.
The rally helps offset some of $IREN’s losses this year. As of last week’s close, shares were down 46% YTD. But even then, analyst consensus on Wall Street is bullish – 13 have a buy rating with an average price target of US$76, implying 90% upside.
The former Bitcoin miner specialises in leasing large quantities of high-end Nvidia ($NVDA) GPUs and renting them out to companies training or running AI models. It's part of a growing pocket of companies in the AI economy called neoclouds, though they don’t care for the name.
Nebius’ ($NBIS) CEO called the term ‘a convenient trash bin analysts put us all in,’ noting that each neocloud is different. Nebius doesn’t share Iren’s crypto roots, and designs its own server racks unlike Iren and CoreWeave ($CRWV). Shares rallied 18% on Tuesday after Nvidia revealed a 9.3% stake in the company. And the average analyst price target has jumped 44% in the last three months.
CoreWeave shares also jumped 8% on Tuesday, but price action in the popular neocloud has been choppy YTD. The former Ethereum miner is highly leveraged with significant debt. It captures the most value per megawatt as a full-stack AI platform, but carries the greatest exposure to hardware refresh and utilisation risk. Still, the average price target from 40 analysts implies 75% upside from current prices.
Capital flows to neoclouds are hard to ignore. Even if ‘neocloud’ is a trash bin analysts throw companies into, it's currently one of the most profitable bins on Wall Street.
This is not financial advice nor a recommendation to invest in any of the securities listed. The information presented is for general information purposes only and intended to be of a factual nature only. Past performance and forecasts are not a reliable indicator of future performance. The value of your investments can go down as well as up and you may receive back less than your original investment. The author of this article and other employees of Stakeshop Pty Ltd may hold positions or have financial interests in the company (or companies) discussed above. As always, do your own research and consider seeking financial, legal and taxation advice before investing.
Markets Analyst
Samy is a markets analyst at Stake, with seven years of experience in the world of investing, working across roles in private banking, venture capital and financial media. She has a Master’s degree in Finance and Data Analytics from The University of Sydney Business School.
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