AI stocks bounced as traders priced in a higher chance of a rate hike
The Nasdaq rose 1.7% by 11:31 a.m. ET on Friday, recovering part of Thursday’s 5.5% drop. The S&P 500 gained 0.9% and the Dow was little changed. IREN (NASDAQ: IREN) jumped nearly 20% at one point after losing about 17% the day before.
The rebound came as the U.S. added 165,000 jobs in October, well above the 65,000 economists had expected. Unemployment edged down to 4.1% and hourly pay rose 0.4% from September. At one point Friday, futures priced in about a 78% chance of a quarter-point Fed hike in December, up from roughly 67% Thursday. U.S. jobs report
Our thesis is that the next wave of AI construction will favor projects with both a customer under contract and financing in place. If borrowing gets more expensive, developers still raising money may have to pay more in interest, issue shares or build in stages. IREN shows how those risks can differ even within the same company.
IREN is still lining up money for its next wave of projects
IREN’s quarterly AI cloud revenue rose from $71 million to $200 million as the first phase of its Horizon project went into service for Microsoft. The company still posted a $263 million net loss. IREN’s quarterly results
IREN expects $15 billion in remaining fiscal-year capital spending. It identified about $9 billion in cash, committed equipment financing and customer prepayments. For the other $6 billion, it is targeting a mix of equipment financing, additional prepayments and other funding. The terms it secures will help determine how quickly it can add capacity. IREN’s funding breakdown
Subscribe to Wall Street Access for Emerging AI Infrastructure Stocks
A customer can help pay for the chips
In one new five-year deal, a customer agreed to a prepayment covering 90% of the estimated GPU costs for that contract. That changes who puts up the money when the chips have to be ordered, months before the developer can start billing for computing time.
Financing still leaves work to do. IREN says it has funding lined up, subject to financing conditions, for the projects behind its $4 billion-plus annualized revenue target. A customer-requested design change and supplier timing pushed that target from year-end to January 2027, with a possible slip into February. Revenue will build as IREN tests the sites and customers accept them.
October inflation data are due November 10, the next test for December rate expectations. At IREN, we’ll be watching how much of the $6 billion it secures, what terms it gets and when the next sites start billing customers.
Subscribe to Wall Street Access
Explore More Stories in Markets
Disclaimer
Wall Street Access is an independent financial publisher. Wall Street Access is not a financial advisor. No company mentioned has compensated Wall Street Access for the preparation, publication or distribution of this article. This content is provided for informational and educational purposes only and is not investment advice or a recommendation to buy, sell or hold any security. Investing involves risk, including the possible loss of principal.
Prices, market capitalizations, financial figures and other market data are based on information available as of the date and time of publication and may change without notice. Information is drawn from public sources believed to be reliable but is not guaranteed to be complete or accurate. Opinions and expectations expressed are our own and may change as new information becomes available.
Readers should conduct their own due diligence and contact a licensed financial professional before making any investment decision. Past performance does not guarantee future results. Any material ownership interest or conflict of interest, where applicable, will be disclosed separately.
