$$IREN (-14.55%)
H100 rental prices double for multi-year contracts, while compute demand exceeds supply

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📌 Key Findings

• GPU Prices: Older H100 GPUs were re-leased at twice the rental rates, with multi-year contract terms.

• Unit Economics: Higher GPU costs are passed directly on to customers. Payback periods remain stable or even shorten.

• CapEx Discipline: Investments are being deliberately curtailed due to financing costs and capital availability, not because of weaker demand.

• GPU Procurement: IREN prioritizes land, power capacity, and data centers over the premature purchase of all GPUs planned for 2027.

• NVIDIA: Collaborating on power management software that could enable more GPUs per connected MW.

• Microsoft: Network adjustments affect 200 MW; additional CapEx is insignificant, according to management. Horizon 2 is already powered up and equipped; Horizon 3 has GPUs on site; Horizon 4 is expecting further deliveries.

• Summary: By June 2027, ~$25 billion in data center and GPU assets are expected, including ~$10 billion in largely unencumbered data center assets.

$IREN (-14.55%)

Q1 2027 Quarterly Results:

Revenue: $228 million, up 66% from the previous quarter ($137 million)

AI Cloud: $200 million, +182%, gross margin 86%

Bitcoin mining: $28 million (previous quarter: $67 million)

Adjusted EBITDA: $66 million ($19 million in the prior quarter)

Net loss: $263 million, including $148 million in depreciation and amortization and $106 million in stock-based compensation

Order backlog: $20.3 billion, +22%, with approximately two-thirds from customers with investment-grade ratings

Since the end of the quarter, IREN has signed a five-year contract worth approximately $22 million in revenue per megawatt . The customer pays 90% of the GPU costs in advance.

In addition, there is a short-term contract worth $40 million per megawatt.

H100 GPUs are being leased at twice the previous price, and a new contract has been signed with an unnamed leading AI lab.

In addition to $NVDA (-9.68%) and $MSFT (-4.58%) IREN now counts 13 additional customers.

Horizon 1 has been running for Microsoft since this quarter, and Horizon 2 through 4 are in the late stages of development. The targeted ARR of more than $4 billion will no longer by the end of the year, but in January 2027—possibly not until the end of February. IREN cites a design change requested by a customer and delivery times as the reasons.

Regarding financing, the figure is $15 billion in planned investments for the remainder of the fiscal year $9 billion secured; the remaining $6 billion still outstanding.

It remains to be seen whether the timeline will remain as of January and under what conditions the outstanding $6 billion will be secured.

Unlike the stock price, demand for AI remains strong.

Source: https://iren.com/investor/news

$IREN (-14.55%)

• Revenue: $228 million (+66% compared to the previous quarter), of which $200 million came from AI Cloud (nearly tripled) and only $28 million from Bitcoin mining
• Margin: AI Cloud gross margin remained stable at 86%; adjusted EBITDA rose from $19 million to $66 million
• Still a loss: Net loss of $263 million (previous quarter: −$684 million, due to large write-downs at that time)
• Backlog: $20.3 billion (+22%), about two-thirds from customers with investment-grade ratings
• Main headwind: Although the $4 billion ARR target is contractually secured and financed, it is being pushed back from the end of 2026 to January 2027, possibly until the end of February. The reasons are a design change requested by the customer and delivery times
• New contracts signed after the end of the quarter: An expansion with a leading AI lab, a 5-year contract at approximately $22 million/MW (the customer pays 90% of the GPU costs upfront), and a short-term contract at $40 million/MW. Prices are rising by 11–12% for 3- and 5-year contracts
• Financing: $15 billion in Capex is still planned for the remainder of FY27, of which only $9 billion has been secured. Net debt rose from $0.2 billion to $4.4 billion
• Milestone: Horizon 1 is operational at Microsoft

Did it meet expectations? Yes, in terms of revenue—slightly above expectations. Consensus estimates ranged from $219.95 million (Zacks) to $230.45 million, depending on the source, with most at around $221.7 million. At $228 million, IREN is thus at the high end of the range. This is noteworthy because, throughout the 2026 fiscal year, revenue had missed the consensus every quarter.

The press release does not specify earnings per share, so I cannot accurately compare it to the estimates (approximately −$0.49 to −$0.76). The postponement of the ARR target is likely to be received negatively by the market, as the stock was already under significant pressure. On November 4, it closed at $21.71, a new 52-week low.

​The geopolitical screws in the global AI race are being tightened drastically. Anyone who thought that U.S. export bans on cutting-edge hardware—such as NVIDIA’s AI processors—could be circumvented through clever cloud leasing in third countries is now in for a rude awakening.

​Published on November 4, 2026 , the collapsed 7-billion-dollar deal between Oracle and Tencent is just the beginning of a chain reaction that will particularly impact the business model of the so-called neo-clouds .

​Timeline of the Escalation: November 2026

• ​November 3, 2026 (Nvidia directive): As reported in the media, Nvidia has instructed its cloud and data center partners worldwide to lease no more than 49% of their total capacity to Chinese customers. At least 51% of computing power must be allocated to non-Chinese customers. This directive, communicated verbally through sales and regional teams, closes the loophole that previously allowed Chinese tech companies to lease AI computing power abroad.

• ​November 4, 2026 (Intervention by U.S. authorities): Under pressure from the U.S. government, Oracle’s 5-year, $7 billion contract with Tencent fell through. Tencent had sought access to approximately 100,000 high-end AI chips via Oracle data centers in Southeast Asia. Following security concerns raised by Washington and the subsequent directive from Beijing to switch to domestic chips, Oracle terminated the negotiations.

Why Neo-Clouds Are the Primary Victims

Compared to the established Big Tech hyperscalers (AWS, Microsoft Azure, Google Cloud), this development hits specialized Neo-Clouds (such as $CRWV (-10.61%) , $NBIS (-14.39%) or $IREN (-14.55%)) in a vulnerable spot:

​Massive losses in existing revenue: In recent years, neo-clouds have often relied to a considerable extent on the extremely liquid demand from Chinese customers to fund their aggressive capacity expansions and debt financing. If this customer segment were to abruptly disappear due to regulatory pressure and NVIDIA’s 49% cap, a massive portion of revenue would vanish overnight.

The Mandatory Implementation (The 51% Threshold): The providers have no choice. They must strictly comply with the requirements, as Nvidia mandates audited know-your-customer (KYC) verifications. Anyone failing to meet the quota for new business risks being cut off from allocations of future GPU generations.

​The consequence: Desperate customer acquisition and falling leasing prices

​To close the looming revenue gaps and reach the quota of at least 51% non-Chinese customers required by Nvidia, the neo-clouds must now frantically acquire international customers.

​This market dynamic is predictably leading to the following developments:

• ​A race to the bottom in pricing: As dozens of providers simultaneously attempt to sell freed-up GPU capacity at breakneck speed to American, European, or Southeast Asian companies, a dramatic surplus of available computing power is created.

• ​Drastically falling leasing prices: To quickly poach major clients from the West, neo-clouds must slash their prices. Rental fees per GPU-hour will come under significant pressure in the future and drop drastically.

• ​Market consolidation: Providers with high debt burdens who have financed their hardware at high costs will suffer greatly from falling leasing prices and lost revenue.

​

The Outlook

​The AI market is finally splitting into two isolated ecosystems. While Chinese corporations are being forced to switch to domestic alternatives, neo-clouds in the West must rapidly restructure their business models. The sudden loss of high-spending customers demands swift compensation—and those who lose the price war for Western customers risk falling by the wayside during this consolidation phase.

​

$NVDA (-9.68%)
$ORCL (-8.1%)
$CRWV (-10.61%)
$NBIS (-14.39%)
$IREN (-14.55%)

I'm temporarily away from $IREN (-14.55%) and $IONQ (-8.59%) stepped back for now. Not because I don’t believe in their future, but because I think things will keep going downhill from here, and I don’t want to be part of that. I’m waiting to see how the midterms, the Anthropic IPO, and other developments play out, and I’ll check back here next year at the earliest. In addition, I’m still heavily invested in tech in my portfolio.

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