IREN stock has entered a brutal correction phase, losing more than 55% of its value from this year’s peak and raising fresh questions about whether parts of the AI trade have moved into bubble territory. After hitting an all-time high of about $76 in November, the shares have slid to roughly $35, erasing months of gains in just a few weeks.
This steep decline has not happened in isolation. The pullback in IREN has tracked a broader sell-off in high-growth AI infrastructure names and specialized compute providers. Companies such as CoreWeave, Nebius, and Bitfarms have also seen sharp reversals as investors reassess how sustainable recent valuations and growth projections really are.
AI euphoria meets reality
The cooling of AI enthusiasm has been accelerated by recent earnings from some of the sector’s key players. Results from Oracle and Broadcom in particular have rattled confidence. Oracle, heavily leveraged and aggressively expanding its data center footprint to capture AI demand, reported negative free cash flow as capital expenditures surged. Its stock has since fallen by more than 50% from this year’s highs, a dramatic move for a large-cap tech name that had been riding the AI narrative.
These figures have reminded investors that rapid AI-related growth often requires vast upfront investment. Building, leasing, and powering data centers, securing GPUs, and maintaining high-performance infrastructure are capital-intensive tasks. When even established giants struggle to generate positive free cash flow while scaling for AI, investors naturally become more cautious toward smaller or more speculative players like IREN.
Funding needs and balance sheet pressure
Another key overhang on IREN is its funding profile. To support its ambitions in the AI infrastructure space, the company recently raised over $2 billion through a mix of equity and convertible debt. While this capital injection is crucial for expanding capacity and meeting customer commitments, it also raises concerns about dilution for existing shareholders and the long-term debt burden.
On the positive side, this funding is tied to very real demand. IREN has reportedly secured a substantial $9.7 billion order from Microsoft, underscoring that hyperscalers and large tech firms are still hungry for additional compute and infrastructure partners. However, the size of this order also highlights the scale of investment IREN must undertake in hardware, data centers, and energy to deliver on such contracts. Markets are now asking whether the company can translate these headline-grabbing deals into sustainable, profitable growth without overstretching its balance sheet.
Intensifying competition in neocloud and AI compute
IREN’s path is further complicated by a rapidly crowding competitive landscape. Bitcoin mining firms with large existing data center footprints are increasingly pivoting toward AI-related compute, seeking to repurpose or augment their infrastructure. This shift is reshaping the market.
One notable example is Hut 8, which recently secured a $10 billion order from Anthropic. Deals of this magnitude show that hyperscalers and AI companies are diversified in their choice of infrastructure providers and are willing to place big bets with multiple partners. At the same time, neocloud and specialized GPU cloud platforms such as Lambda Labs, Nebius, and CoreWeave are capturing additional market share, each pushing prices and service offerings more aggressively.
The result is a buyer’s market forming at the top end of the AI infrastructure stack. With more providers competing for large, sophisticated clients, those customers gain stronger negotiating leverage. They can push for lower prices, better terms, and flexible contract structures. For IREN, that dynamic threatens margins and makes revenue forecasts less certain, especially when set against rapidly rising capital costs.
Bitcoin exposure: a double risk
Although IREN is positioning itself as a neocloud and AI infrastructure company, a substantial share of its current income still comes from Bitcoin mining operations. This creates a second layer of volatility on top of the AI story.
Bitcoin has dropped significantly from its highs—falling from around 126,250 units in October to roughly 87,000 currently, according to the figures referenced for IREN’s context. For a company that earns a large portion of its revenue from mining, such a decline directly impacts top-line performance and cash generation. Lower Bitcoin prices make mining less profitable, compress margins, and can force miners to scale back operations or delay planned investments.
This combination of AI-related capital intensity and cyclical Bitcoin revenues makes IREN particularly sensitive to shifts in market sentiment. When both narratives—AI growth and crypto strength—cool at the same time, the downside in the stock can be amplified, as current trading suggests.
Technical picture: momentum turns decisively bearish
On the technical front, IREN’s chart reflects the fundamental worries. The daily price action shows a steep slide from around $77 down to the mid-$30s. This move has taken the stock below the 50% Fibonacci retracement level drawn from its recent major advance, an indication that the prior uptrend has been significantly damaged rather than merely pausing.
The share price is now trading under both the 50-day and 100-day Exponential Moving Averages, signaling that selling pressure has dominated over the medium term. Bears remain firmly in control as the stock holds beneath these key trend gauges. The price has also dropped below the Supertrend indicator and broken through a notable support level near $48.40, which marked the lows in late October.
When former support zones fail decisively, they often flip into resistance, making any rebound attempts more difficult. Unless the stock can reclaim these levels, particularly the region around $48, traders are likely to treat rallies as opportunities to reduce risk or initiate new short positions rather than as the start of a durable recovery.
Outlook: where might the downside stop?
From a purely technical standpoint, the current setup suggests further weakness is possible. With the next major support area identified around the $20 mark, many chart watchers expect sellers to continue pressing the price lower in the absence of a strong positive catalyst. A sustained bounce above the $48 resistance area would be needed to challenge the prevailing bearish structure and hint that momentum is turning in favor of the bulls again.
Short-term investors are likely to focus on price action around interim support and resistance zones, looking for signs of capitulation (such as a huge spike in volume or a rapid intraday reversal) that might indicate sellers are exhausted. Longer-term investors, by contrast, will be watching fundamental developments: new contract wins, clarity on margins, progress in diversifying away from Bitcoin, and whether capital expenditures can be brought into balance with cash flow.
Are AI infrastructure stocks in a bubble?
IREN’s collapse reignites the debate over whether the AI segment, especially infrastructure and GPU-focused names, has entered bubble territory. In recent quarters, valuations in parts of the AI ecosystem had climbed to levels that implied near-flawless execution and years of uninterrupted hypergrowth. Any sign of slower ramp-up, higher costs, or competitive pressure can lead to sharp repricing—as the market is now witnessing.
However, labeling the entire AI sector a bubble may oversimplify the picture. Underlying demand for AI compute, data centers, and model training infrastructure is real and likely to keep expanding for years. The question is not whether AI will grow, but which companies can build defensible positions, maintain healthy margins, and fund expansion without overleveraging.
In that context, what is happening to IREN and its peers might be less a collapse of the AI story and more a harsh re-rating of companies where expectations had become detached from near-term fundamentals.
What investors should watch next
For those following IREN, several key themes merit close monitoring:
1. Contract quality and profitability
Large orders from blue-chip clients sound impressive, but the details matter. Investors should pay attention to contract length, pricing, margin expectations, and any minimum volume commitments or take-or-pay clauses. Revenue that scales at the expense of profitability may not support long-term equity value.
2. Capital expenditure and cash flow
As seen with Oracle, heavy investment can quickly push even large firms into negative free cash flow. IREN’s ability to manage build-out costs, secure favorable financing, and eventually generate positive free cash flow from its AI infrastructure projects will be crucial.
3. Shift in revenue mix
A gradual transition from Bitcoin-dominated revenues toward more stable AI infrastructure income would likely reduce the stock’s sensitivity to crypto cycles. Updates on how quickly that mix is evolving will be important.
4. Competitive differentiation
In a market where multiple players offer GPU clouds, data center capacity, and AI compute services, IREN needs a compelling edge—whether in cost, access to cheap energy, geographic footprint, technology stack, or customer relationships. Clarity on this differentiation can influence how the market values its long-term potential.
5. Regulation and energy dynamics
Both Bitcoin mining and large-scale AI compute are energy-intensive. Changes in regulation, energy prices, or environmental policy can significantly impact operating costs and project economics. Any advantage IREN can secure on the energy side could translate into stronger margins.
Risk profile: who might consider IREN now?
At current levels, IREN looks like a high-risk, high-volatility play rather than a stable growth story. The stock may appeal to traders comfortable with sharp swings who are looking for oversold bounces or short-covering rallies. For them, technical indicators and short-term news flow will be key.
Longer-term or more conservative investors may prefer to wait for greater clarity: stabilization in Bitcoin prices, proof that AI contracts are translating into predictable, profitable cash flows, and evidence that management can navigate competition without excessive dilution or leverage.
Long-term narrative vs. short-term pain
Despite the dramatic sell-off, the long-term themes behind IREN’s strategy have not vanished. The world continues to demand more compute, more storage, and more power to fuel AI applications. Companies with scalable infrastructure, reliable energy access, and credible execution may still find significant opportunities over the next decade.
What the current correction illustrates is that markets can be brutal when expectations overshoot reality. High-growth stories are rewarded on the way up but are equally punished when questions emerge about valuation, funding, or sustainability. IREN’s 55% drop from its year-to-date high is a textbook example of that dynamic.
For now, the balance of evidence—technical signals, sector sentiment, and company-specific risks—tilts bearish. Unless the stock can reclaim critical resistance levels and the company can demonstrate improving fundamentals, further downside toward lower support zones, including the $20 area, remains a distinct possibility. Conversely, a decisive move back above the $48 level, supported by stronger results or clearer strategic progress, would be an early sign that the worst of the sell-off may be over.