Alright, let's dissect what's happening with IREN and this supposed blockbuster deal with Microsoft. The headlines scream "blockbuster," but as any seasoned analyst knows, you gotta dig deeper than the press release.
First, the basics. IREN, an Australian data center company, saw its stock jump 20% on news of a $9.7 billion deal with Microsoft. (That's a market cap bump of, roughly, a billion dollars on a ten-billion-dollar promise). They're providing access to Nvidia's GB300 GPUs at their Texas facility. Microsoft gets AI cloud capacity; IREN gets its biggest customer. A classic win-win narrative, right?
Not so fast. This deal, spread over five years, hinges on Microsoft actually needing that much GPU power from IREN. We're talking about a commitment to Nvidia's next-generation chips, and the AI landscape is changing faster than I can run a Monte Carlo simulation. Will GB300s still be relevant in, say, three years?
The article mentions a 20% prepayment. This detail is crucial. It's a sign of Microsoft's confidence, sure, but it also cushions IREN if the whole thing goes sideways. It's not all that confidence-inspiring for IREN, though, is it? If this company is set to become the leading AI cloud service provider, as its co-CEO claims, why are they touting an agreement that is only 20% prepaid?
Then there's the Eric Jackson factor. Apparently, this IREN surge has also been fueled by retail investor interest after a shout-out from the same hedge fund manager who pumped Opendoor. (Remember that one?). That should set off alarm bells.
The broader market impact is interesting. Semiconductor manufacturers got a boost, with Nvidia up 3.8% and Micron Technology advancing 5.6%. Even U.S. approval for Microsoft to ship Nvidia chips to the UAE played a role. It's all interconnected.
Adeia, a tech licensing company, is down 17% after suing AMD for patent infringement. Stocks making the biggest moves midday: Amazon, Adeia, Kenvue, Iren & more It's a reminder that the tech world is a brutal arena.
Other significant movers include Kenvue, up 15% on news it's being acquired by Kimberly-Clark for $48.7 billion. Cipher Mining surged 13% after exceeding expectations. Idexx Laboratories and Freshpet also saw double-digit gains. But Beyond Meat? Down 12% after delaying its earnings report. The market is a fickle beast.
And this is the part of the report that I find genuinely puzzling. Why does the market react so strongly to potential demand? I get the hype, but we're pricing in future earnings based on deals that are, at best, contingent. It's like buying a lottery ticket and immediately spending the winnings.
I wonder, what's the actual utilization rate of existing GPU cloud capacity? How much of this demand is real, and how much is just fear of missing out (FOMO) driving these valuations sky-high? Nobody seems to be asking these questions.
