Key Takeaways
- Nvidia is expected to slow its investments in AI companies and its credit guarantees for them now that Jensen Huang has resigned as CEO, The Information reported.
- IREN looks more exposed than most companies, since Nvidia will rent about $700 million a year of cloud capacity from it under a five-year, $3.4 billion contract and holds rights to buy up to 30 million IREN shares.
- Microsoft is IREN’s largest customer and is reportedly checking IREN’s projects more closely, while IREN still has $6 billion of this fiscal year’s build to fund.
- The signed Nvidia contract should hold, but a slower Nvidia makes it harder for IREN to sign new contracts and raise its next round of financing.
Nvidia (NVDA) has a new boss, and IREN (IREN) may feel it more than almost anyone.
Jensen Huang resigned as Nvidia’s CEO on Nov. 12, and CFO Colette Kress has been named interim CEO while the board searches for his replacement. The Information reported that Nvidia is expected to slow its aggressive AI investing, which puts billions of dollars of startup funding and credit guarantees at risk. It also reported that Kress had pushed back on some of the deals Huang championed.
That’s a problem for IREN, which is shutting down its bitcoin mining by the end of December so it can rent out GPUs instead. Nvidia makes those GPUs, has contracted to rent cloud capacity from IREN and holds rights to buy its stock. IREN’s biggest customer, Microsoft (MSFT), is expected to bring in about $1.94 billion a year once its contract is fully live, and Microsoft is getting more careful too.
IREN closed down 6.53% at $19.48 on Nov. 12 as Nvidia fell 4.34%, and the selloff hit the whole neocloud group, with CoreWeave down 6.86%.
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Nvidia sits on both sides of IREN’s books
According to IREN’s annual report and its earnings calls, here’s what IREN has with Nvidia:
- A five-year cloud contract worth about $3.4 billion, signed in May 2026
- About $700 million of ARR from about 60 MW of capacity, set to ramp up from early 2027
- That $700 million comes on top of the $4 billion of ARR contracted for IREN’s 2026 capacity
- Rights to buy up to 30 million IREN shares at $70.00, granted May 7 and tied to the delivery of up to 600,000 GPUs
ZeroHedge described that loop on X: “The structure is the same almost every time: Nvidia buys a stake, the recipient commits to Nvidia hardware, and the cash comes back as GPU orders.” IREN was one of the companies on its list. IREN’s setup runs a little differently, since Nvidia holds rights to buy shares at a set price and doesn’t own a stake yet. Either way, the money moves in the same circle.
Nvidia should honor the deal it already signed
In Nvidia’s statement on Huang’s exit, new board chair Harvey Jones said that “we expect the company’s operations, customer commitments and product roadmap to continue without interruption.” A five-year cloud contract is about as clear a customer commitment as there is, and The Information reported that investments already under legally binding contracts are expected to go ahead. That makes IREN’s $700 million a year look secure for now. But Wall Street’s estimates count on a lot of deals IREN hasn’t signed yet. Analysts expect revenue to more than triple to $2.39 billion in fiscal 2027 (the year to June 2027) and then roughly triple again to $7.15 billion in fiscal 2028.
That fiscal 2028 figure is far above the $4 billion of ARR contracted for IREN’s 2026 capacity plus Nvidia’s $700 million, so it depends on 2027 capacity IREN is still trying to sell. The fiscal 2027 estimate has already fallen from $2.81 billion in late October, after IREN pushed back its $4 billion run-rate target to January or possibly February. If Nvidia signs fewer new deals, fiscal 2028 would likely take most of the hit.
And Nvidia isn’t the only big customer getting more careful. Bloomberg reported that Microsoft is watching some IREN, Nebius and Nscale projects more closely. On IREN’s Nov. 5 call, co-CEO Daniel Roberts said Microsoft had asked it to “reconfigure and upgrade some of the network infrastructure” for its latest frontier models. IREN’s annual report says the Microsoft and Nvidia contracts make up a “substantial majority” of its contracted revenue.
IREN still needs $6 billion
IREN has spent more on its build-out than its operations brought in every year since fiscal 2022. In fiscal 2026, capex was $4.33 billion against $2.10 billion of cash from operations, and $1.84 billion of that cash came from customers paying in advance.
On the Nov. 5 call, management said $6 billion of this fiscal year’s build is still unfunded. It also said it sees $12 billion to $15 billion of loan and prepayment options before it would turn to convertibles or stock. But Roberts added that capital markets had become more selective in recent weeks, and that was a week before Huang resigned.
How much IREN pays to borrow depends on who the customer is. The GPU financing tied to Microsoft’s contract carries a weighted rate of 6.0%, while the Mackenzie loan for customers without investment-grade credit costs 9.0% fixed. That gap suggests lenders will fund contracts with companies like Nvidia and Microsoft cheaply, and a slower Nvidia means IREN signs fewer of those contracts.
When loans fall short, IREN has turned to stock. Its weighted average diluted share count rose from 40.9 million in fiscal 2022 to 316 million in fiscal 2026.
Nvidia’s rights would add up to 30 million more shares, but only at $70.00 each. That’s more than three times IREN’s Nov. 12 close and well above JPMorgan’s newly cut $55 target, so Nvidia is unlikely to write that $2.1 billion check anytime soon.
IREN has more riding on Kress than almost anyone
IREN’s signed Nvidia contract should hold. But IREN is trying to sell its 2027 capacity and raise $6 billion just as one of its biggest customers is expected to write fewer checks and its biggest is watching its projects more closely. If Kress does slow Nvidia’s deal-making, that makes IREN the clearest loser. Of course, she hasn’t said she will. Nvidia’s Nov. 17 results, its first report under Kress, are the first chance to hear how she plans to handle new deals and guarantees. A new Nvidia cloud deal or credit backstop for any neocloud, or IREN’s first data center financing, would go a long way toward easing that worry.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
