Iren Stock Has Dropped 12% in a Week. Why, and How to Play It Here.

One of the biggest challenges for the artificial intelligence buildout, surprisingly, isn't the money. Big tech companies are spending hundreds of billions of dollars this year on AI infrastructure, and they seem determined to exceed that next year.

Obviously, demand is not going to be a problem. But supply is becoming an issue of its own. Nvidia (NVDA) officials have directly tied supply shortages to limiting AI revenue growth. Dell Technologies (DELL), whose stock recently hit all-time highs, would likely be doing even better if it didn't have supply shortages. Management has said the available component supply isn't enough to fulfill customer orders. And Elon Musk, the CEO of Tesla (TSLA) and SpaceX (SPCX), has noted that foundries are running at top capacity.

Now we can add Iren (IREN) — an Australian company in the data center business — to that list of companies concerned about supply shortages. CEO Daniel Robert posted on X (formerly Twitter) that it would take the industry years to build the AI infrastructure to meet the demands of current AI workloads. And as those workloads increase, the demand for capacity will only increase.

"The constraint is HBM (high-bandwidth memory), the memory that sits inside every major AI chip. Three companies make it and all three are sold out this year. A new memory plant takes years to build," he wrote. Then even after those chips are built, they need a building with power, which is another delay, he said.

"Goldmans reckons only about half the US capacity scheduled over the next two years will actually be built on time," Robert wrote.

Robert took to social media in response to calls to slow the pace of frontier AI, and argued that the risk to demand "continues to seem heavily weighted to the upside." But the debate has been weighing heavily on Iren stock, which is down nearly 12% in the last week.

Iren, which is based in Sydney, Australia, is an interesting company. It was first known primarily for mining Bitcoin, but the growth of AI and the need for data centers to power AI workloads allowed it to become a key AI infrastructure stock.

The company plans to deliver 300 megawatts of capacity this year, and grow that to 800 MW in 2027, with data centers located in Canada, the U.S., Australia, and Spain.