IREN Limited IREN shares are currently trading at a high price-to-sales (P/S) multiple, far above the broader Zacks Finance sector and the Financial - Miscellaneous Services industry. IREN’s trailing 12-month P/S ratio sits at 25.04X, significantly higher than the Financial Miscellaneous Services industry’s 2.7X and the Zacks Finance sector’s 5.85X. The Zacks Value Score of F also suggests that the IREN stock is overvalued.
IREN’s elevated valuation raises concerns about whether the stock can justify such lofty multiples. Considering the premium valuation, investors must be wondering whether they should buy, hold or sell the stock, especially amid near-term challenges.
TTM 12-Month P/S Ratio
Image Source: Zacks Investment Research
Lower Bitcoin Mining Revenues Weigh on IREN’s Prospects
IREN is experiencing near-term pressure on revenues as it moves away from Bitcoin mining and focuses more on AI cloud services. IREN’s focus on no longer being a pure-play crypto-mining company while evolving into an AI Cloud Service Provider means that the company will continue to see lower revenues from its bitcoin mining business on a quarter-on-quarter basis.
In the third quarter of fiscal 2026, total revenues fell 21.6% from the previous quarter. Management said that this drop was mainly due to lower Bitcoin mining revenues, which declined 33.6% on a sequential basis in the third quarter of fiscal 2026.
IREN is shifting power and infrastructure away from mining and toward AI workloads. AI cloud revenues are increasing, but they are not yet large enough to fully make up for the drop in mining revenues. Management said that this pressure should be temporary. As more GPUs are installed and AI cloud contracts ramp up, AI revenues are expected to become the main revenue source. Until then, quarter-over-quarter results for Bitcoin mining revenues may remain uneven.
Rising Impairment Charges Hurt IREN’s Prospects
Higher costs relating to the recognition of impairment charges on IREN’s Bitcoin mining hardware, as it shifts toward AI cloud infrastructure, continue to weigh on IREN’s prospects. In the fiscal third quarter, impairment charges amounted to $140.4 million, representing a sharp increase from $31.8 million in the prior quarter.
These impairments charges reflect the declining importance and value of IREN’s legacy mining business. IREN’s transition to AI cloud means that these charges are expected to continue in the near term due to which reported profitability may come under pressure in the upcoming quarters.
The Zacks Consensus Estimate for IREN’s fiscal 2026 earnings is pegged at 25 cents per share, revised down by 29 cents over the past seven days.
IREN Limited Price and Consensus
IREN Limited price-consensus-chart | IREN Limited Quote
IREN Stock Faces Stiff Competition
While the AI data center market provides a strong growth outlook, solid competition from key players, such as Hut 8 Corp. HUT, TeraWulf WULF and Applied Digital APLD, multiplies competition for IREN.
Recently, Hut 8 signed a 15-year lease agreement for the first phase of its Beacon Point AI data center campus in Texas. The agreement covers 352 megawatts (MW) of IT capacity and has a base contract value of $9.8 billion. The transaction increases Hut 8’s total contracted AI data center capacity to 597 MW, with total base-term contract value reaching $16.8 billion.
In February 2026, TeraWulf announced the expansion of its digital and power infrastructure portfolio through the acquisition of two existing sites in Kentucky and Maryland. Together, these two acquisitions add 1.5 GW of power capacity to the company’s portfolio. WULF plans to add 250-500 MW of new contracted capacity each year, depending on customer demand and power availability.
In January 2026, Applied Digital announced that it had started construction on Delta Forge 1, a large AI data center campus in a southern U.S. state. Delta Forge 1 is designed to support up to 430 MW of total utility power in its initial phase. This can support up to 300 MW of critical IT load. Here, APLD’s goal is to turn available power into usable, high-density AI capacity for large customers and is designed to scale with customer demand while providing a reliable performance.
The above-mentioned factors seem to have weighed on investors’ sentiments, as reflected in the underperformance of IREN’s share price over the past six months. IREN shares have returned 21.6% over the past six months, underperforming its peers, Hut 8, Applied Digital and TeraWulf. Over the past six months, shares of Hut 8, Applied Digital and TeraWulf have surged 189.7%, 85.1% and 106.9%, respectively.
6-Month Price Return Performance
Image Source: Zacks Investment Research
Conclusion: Sell IREN Stock Right Now
IREN faces near-term risks from lower bitcoin mining revenues and rising impairment charges as the company moves away from Bitcoin mining to focus more on AI cloud services. Further intense competition in the AI infrastructure space from major players, such as Hut 8, Applied Digital and TeraWulf, is concerning for IREN, and a premium valuation warrants a cautious approach to the stock.
Currently, IREN carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Applied Digital Corporation (APLD): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).