This Analyst Is Warning that a Popular AI Data Center Stock Could Plunge More Than 30% from Here

IREN, a vertically integrated data center and Bitcoin miner based in Sydney, Australia, has been on a rollercoaster ride in the stock market recently. The company’s bull run came to a halt in October, leading to increased volatility in its stock price. The latest development saw H.C. Wainwright downgrading IREN to a “Sell” rating, citing valuation risks and concerns about the company’s AI infrastructure potential.

The downgrade by H.C. Wainwright has spooked investors, with the analyst raising the target price to $45, a significant drop from current levels. The firm’s move reflects a growing sentiment among investors that IREN may have reached its peak, especially with the increased focus on AI cloud and high-performance computing services.

Despite delivering impressive returns of 583% in 2025 and touching an all-time high of $75.73, IREN’s stock has faced scrutiny for being overvalued. The company’s trailing twelve-month P/E ratio of 155x and P/S ratio of 26x are significantly higher than sector medians, indicating overvaluation. Additionally, IREN’s recent $875 million convertible debt offering has raised concerns about its broader capital structure.

On the operational front, IREN announced strong 2025 annual results, beating revenue and profit estimates for the final quarter. The company recorded fourth-quarter revenues of $188.9 million and adjusted EBITDA of approximately $122 million, driven by unrealized gains on financial instruments. Looking ahead to 2026, management has provided optimistic guidance, expecting total revenues to exceed $927 million for the year.

Despite the recent pessimism surrounding IREN’s stock, there is still a strong bias towards bullish sentiment among analysts. Of the 13 analysts covering the stock, eight maintain a “Strong Buy” rating. The stock is trading just above its mean target price of $65.30, with the highest target price of $100 offering 50% upside potential from current levels.

In conclusion, while IREN’s stock may be facing challenges due to valuation concerns and analyst downgrades, the company’s strong operational performance and optimistic guidance for the future indicate that there is still potential for growth. Investors should carefully assess their options and consider the long-term prospects of IREN before making any investment decisions.