Nvidia will invest up to $2.1 billion in Nebius competitor IREN. Is it worth buying its shares?

Chipmaker Nvidia may invest up to $2.1 billion in data center operator IREN, and together with the company will deploy $3.4 billion worth of AI infrastructure. Despite the publication of IREN's weak quarterly report on the same day, after the news of the alliance with Nvidia, investors rushed to buy up shares of its partner. They soared nearly 9% in the premarket.

Nvidia and cloud provider IREN have signed a $3.4 billion contract to supply and deploy infrastructure based on the Blackwell architecture. The agreement calls for the creation of up to 5 GW of capacity to meet the growing demand for neural networks, the companies said in a joint press release. Meanwhile, the key facility will be the 2 GW IREN Sweetwater campus in Texas, which will be the flagship site for Nvidia's AI infrastructure. To emphasize the scale of the project, Bloomberg cites a comparison: just 1 GW of capacity can supply electricity to about 750,000 households.

The deal aims to accelerate the creation of large-scale "AI factories" by combining Nvidia's architecture with IREN's infrastructure expertise. Unlike traditional data centers designed for model training, AI factories are optimized for inferential tasks, i.e. processing user requests and the work of autonomous AI agents, MarketWatch notes.

At the same time, the most important signal for investors was the fixing of the chipmaker's five-year right to buy 30 million shares of IREN at a price of $70 per piece, the publication writes.

The company initially specialized in bitcoin mining, and then switched to AI computing. Today, IREN is commonly referred to the category of so-called "neoclouds" - a new type of providers that build their cloud services on the basis of Nvidia GPUs, Reuters writes. Such players allow technology giants to get access to computing power, eliminating the need to build their own data centers from scratch, the agency explains.

In March 2025, the company signed a $9.7 billion cloud contract with Microsoft.

On the day of the release about the expanded partnership with Nvidia, IREN also announced the purchase of Spain's Ingenostrum, adding 490 MW of capacity in Spain to its portfolio. The total reached 5 GW, MarketWatch points out.

At the same time, Neocloud reported quarterly results that fell sharply short of market expectations: revenue fell 21.6% year over year to $144.8 million, falling short of Wall Street forecasts by 34%, according to MarketWatch. Management attributed this to the transformation of the business and the transition from bitcoin mining to cloud-based AI computing.

The company's loss increased by almost 60% to $247.8 million, which was almost five times worse than analysts' estimates.

Nevertheless, IREN jumped 8.7% on the premarket on May 8. Over the past year, its capitalization jumped 285% - and has added another 51% since the beginning of 2026.

The consensus analysts' rating on the cloud company's stock is "Overweight", which is equivalent to a buy recommendation. "bullish ratings" were assigned to it by 12 analysts out of 17. Three of them advise to hold positions, and two - to sell securities.

The deal between Nvidia and IREN underscores the industry's critical need to expand its IT infrastructure, Reuters notes. Against the backdrop of the AI boom, the world's largest tech companies are allocating record budgets for long-term leases and buyouts of server capacity. Last week, the four largest US IT giants - Microsoft, Meta, Alphabet and Amazon - reported their financial results, confirming that spending on AI will not slow down. Their combined infrastructure spending could exceed $700 billion this year.

At the same time, investors' concerns about so-called "circular deals" in the AI market are growing. Nvidia is actively entering into agreements across the entire artificial intelligence ecosystem, Bloomberg writes. The company already owns stakes in developers such as OpenAI and chip makers including Marvell Technology. This week, it took a $500 million stake in fiber optic manufacturer Corning. Nvidia is also investing in IREN competitors such as CoreWeave and Nebius. In this way, the chipmaker is funding the very customers who buy its chips, Bloomberg explains.

Nvidia CEO Jensen Huang flatly denies the allegations. "This is just a small fraction of the funds that these companies end up having to raise. The idea that these deals are circular is ridiculous," he claimed in January.

This article was AI-translated and verified by a human editor