AI Energy Crisis: Why One Data Center Stock Could Dominate the Next Market Surge

The artificial intelligence bull market has already proven itself to be more than just hype—it’s backed by genuine revenue growth and transformative technology. But here’s what most investors are missing: while everyone focused on semiconductor companies like Nvidia during the first wave of AI boom, a different constraint is now emerging as the real bottleneck.

The Hidden Challenge: Power, Not Processors

When Nvidia reached a $5 trillion market valuation, it solved one critical problem—getting the computing power to handle AI workloads. But solving one bottleneck often reveals the next. Today, energy has become the limiting factor.

AI applications consume massive amounts of electricity. Traditional data center infrastructure wasn’t designed for this level of demand. Tech giants from Microsoft to Alphabet recognize this gap and are actively investing in solutions. Alphabet’s $4.75 billion acquisition of Intersect demonstrates just how serious major companies are about securing reliable AI infrastructure with adequate power capacity.

The companies that can provide this energy infrastructure stand to capture billions in revenue. And that’s where IREN enters the picture.

IREN’s Strategic Position

In November, IREN secured a landmark contract with Microsoft: 200 megawatts of IT load capacity through a five-year agreement. The deal values out to $9.7 billion total, translating to nearly $2 billion in annual recurring revenue alone. The company also received a 20% prepayment upfront, providing capital to expand operations.

This isn’t just one lucky contract. IREN maintains a multi-gigawatt pipeline, meaning more deals of similar magnitude are likely forthcoming. Company co-CEO Dan Roberts noted that demand is outpacing supply—IREN can’t build sites fast enough to meet client requests. This supply constraint actually validates the company’s market opportunity.

Each new data center facility can generate multiple large contracts comparable to the Microsoft agreement. When you can add $1 billion+ to annual revenue with a single contract, scaling becomes achievable at a pace most companies can only dream of.

The Numbers Behind the Growth

IREN’s current revenue still leans heavily on crypto mining operations, but the AI infrastructure segment is accelerating dramatically. The company projects reaching $3.4 billion in AI cloud annualized run-rate revenue by the end of 2026—an extraordinary leap from just $16.4 million in AI cloud revenue during fiscal year 2025.

First-quarter fiscal 2026 data shows $7.5 million in AI cloud revenue, putting the company on a trajectory to hit its projections. This trajectory suggests sustained high growth rates extending well into 2027 and beyond, as long as IREN can execute its expansion plans on schedule.

With a substantial multi-gigawatt pipeline and demonstrated ability to secure enterprise-scale partnerships, the company has room to expand significantly. The challenge becomes execution—can IREN build and deploy new facilities without delays? Historical performance suggests yes, which means further revenue expansion looks achievable.

The Broader Market Implication

Semiconductors dominated the first phase of the AI bull market. Energy infrastructure providers are poised to lead the next phase. As more investors recognize that power capacity is the new constraint limiting AI deployment, stocks providing that capacity should attract capital accordingly. IREN’s position as a proven leader in this space, with committed revenue from major tech companies already on the books, positions it as a compelling player in this emerging sector.