- IREN stock jumped after NVIDIA invested $2 billion in Nebius.
- The investment is a sign that the company sees more demand for neoclouds.
- It has formed a double-bottom and a falling wedge pattern.
IREN stock price surged by over 10% on Wednesday as the neocloud industry received a boost from NVIDIA, which made another investment. It jumped to $42, up by 18% from its lowest point this year, and has formed a bullish pattern, pointing to more gains.
IREN Stock Rises as NVIDIA Invests in Nebius
In a major statement on Wednesday, NVIDIA said that it was investing $2 billion in Nebius, a top company offering data center and autonomous vehicle solutions.
This is the second major investment in the industry, following the company’s investment in CoreWeave, the largest neocloud company. It is now one of CoreWeave’s biggest investors.
The investment is a sign that NVIDIA believes that the industry is still in its infancy and that its growth will accelerate in the coming years.
However, it has also raised concerns about circular investments, in which the company invests in data center firms that then use the funds to buy its chips.
IREN stock jumped after analysts predicted that NVIDIA may also invest in it in the future, as it is one of the industry’s biggest companies.
The most recent results showed that its revenue dropped to $184 million from $240 million in the same period a year earlier, as Bitcoin prices fell and it continued to transition from mining to AI cloud. It made a $155 million loss, a big reversal from a $384 million profit a year earlier.
Still, management believes the company will continue to grow in the coming years as data spending accelerates. For example, it expects annualized revenue of over $2.3 billion this year, mostly from its partnership with Microsoft.
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Still, fundamentally, there are concerns about the company. One concern is that building its large data centers is expensive and will require future capital raises. This cash raise includes proceeds from existing contracts, convertible debt, and equity, which will result in additional dilution.
The company will also have to contend with the rising memory prices as the shortage continues. Most importantly, the industry has become highly competitive, with most Bitcoin mining companies expanding there. This includes companies like TeraWulf, Riot Platforms, and Mara Holdings.
The challenge with this competition is that top hyperscalers will have more companies to select from, giving them more negotiating power.
IREN Share Price Prediction: Technical Analysis
The daily timeframe chart shows that the IREN stock price has rebounded over the past few days. This rebound occurred after it formed a double bottom at $36.3 and a neckline at $47. A double-bottom is one of the most common bullish reversal signs in technical analysis.
The stock also formed a falling wedge pattern, a pattern composed of two descending, converging trendlines. A rebound normally happens when the two lines are nearing their confluence.
Therefore, the stock will likely have a bullish breakout in the coming days or weeks, potentially to the key resistance level at $50, followed by $63.60. A drop below the key support level at $36.3 will invalidate the bullish outlook.
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