Why I'm Buying This AI Data Center Stock (Even Over NVIDIA)

Ticker Symbol: YOU•Feb 10, 2026

Summary

Alex's main thesis is that IREN (Iris Energy) is successfully pivoting from a Bitcoin mining business into a specialized AI infrastructure provider, or 'NeoCloud.' He argues that while the market reacted negatively to recent earnings, the underlying business is strengthening. The stock's decline was primarily driven by Bitcoin price volatility and one-time accounting charges related to debt restructuring and equipment impairments, rather than operational failure. Alex believes IREN's strategic value lies in its secured power contracts and high-density data center designs which are essential for the AI arms race.

Alex highlights the $9.7 billion multi-year contract with Microsoft as a major validation of IREN's business model. This deal, supported by billions in prepayments and financing, allows IREN to build a massive footprint of 140,000 Nvidia GPUs. To balance the inherent volatility of a smaller company like IREN, Alex also advocates for owning the other side of the partnership by investing in Microsoft, which he views as currently undervalued.

IREN: The company is transitioning power from Bitcoin mining to AI hosting, resulting in a 540% year-over-year growth in AI cloud revenue. Alex notes that while the headline loss was $155 million, the adjusted EBITDA was a healthy $75.3 million with a 41% margin. He mentions management's target of a $3.4 billion annual run rate by the end of 2026.

MSFT: Alex views Microsoft as a stable way to play the AI theme, especially since the stock is down 20% from its recent peak. He points out that Microsoft trades at a P/E ratio of 26, which is the lowest among the Magnificent 7 and significantly below its fair value estimate of a 45 P/E ratio. He highlights their Azure and AI cloud business growing at 39% annually.

NVDA: While not the primary focus of the investment thesis, Alex mentions Nvidia as the key hardware provider for IREN's data centers. IREN plans to deploy approximately 140,000 Nvidia GPUs (Hopper, Blackwell, or Rubin generations) to fulfill its contract with Microsoft.

Mentioned Stocks

MSFT

Sentiment: BUYAction: BOUGHT

Reasoning: Alex explicitly states he is buying Microsoft stock to offset the volatility of IREN. He notes Microsoft is trading at a P/E of 26, the lowest of the Magnificent 7, and is 20% off its peak. He estimates its fair value P/E at 45 based on growth guidance, especially with Azure growing at 39% annually.

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IREN

Sentiment: BUYAction: RECOMMENDED

Reasoning: Alex views IREN as a leader in AI infrastructure with a massive $9.7 billion Microsoft contract. Despite a messy earnings report with a $155M loss due to one-time accounting charges, core operations remain strong with 41% adjusted EBITDA margins and 540% YoY AI cloud revenue growth. He mentions management is targeting a $3.4 billion annual run rate by the end of 2026, making the current 30% crash a potential long-term opportunity.

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