News · November 06, 2026, 06:30 UTC
IREN, the AI data center operator, told investors on Thursday, November 5, 2026, that it now expects to reach $4 billion in operating annual recurring revenue by January or February, later than its previous year-end target.
The shift follows a request from Microsoft for changes at IREN’s Childress, Texas, site, which is being built under a $9.7 billion contract.
The disclosure came on IREN’s fiscal first-quarter earnings call and did not stop a steep decline in the shares, which had already fallen about 20% on November 5 ahead of the report, according to Yahoo Finance. brokertable.net has not reviewed the original earnings materials; details here are based on reporting by Business Insider and Yahoo Finance.
What happened
According to Business Insider, IREN co-CEO Daniel Roberts said Microsoft asked for relatively inexpensive changes to help support the latest AI models after the first building was delivered in August.
“The data centers are practically done, and we’re waiting for remaining equipment to arrive to finish commissioning,” Roberts said on the call.
The project has four phases, called Horizons 1 to 4. Microsoft accepted Horizon 1 in August, and the remaining three phases, about three-quarters of the deal, were due in the December quarter, Yahoo Finance reported.
Once all four are live, management expects roughly $1.94 billion a year from the Microsoft contract, about half of the $4 billion in annual run-rate revenue IREN has under contract for 2026.
The delay traces back to Microsoft’s own disclosure. On its prior earnings call, Microsoft CFO Amy Hood said “some third-party capacity deliveries we expected in Q1 were delayed,” and Microsoft reportedly spent about $5 billion less than planned, per Yahoo Finance.
The outlet said satellite images analyzed by research firm Aterio pointed to IREN and Nebius, though Microsoft did not name the providers.
IREN reported $228 million in quarterly revenue and a net loss of $263 million, Business Insider said. Roberts also said IREN is slowing expansion because of tougher financing conditions, while customer demand remains strong.
Analysis: Why it matters for investors
The central question is whether Microsoft is renting less AI capacity overall or simply waiting on late sites. Yahoo Finance framed the distinction as material: a delayed site is a smaller problem than a customer walking away, which is what Hood described.
If IREN holds December on the calendar, the selloff may look overdone; if any phase slides into 2027, the stock’s lower valuation looks more deserved, the outlet argued.
Analysts expect IREN’s revenue to nearly quadruple to $2.81 billion in fiscal 2027, Yahoo Finance reported, and that forecast depends on the schedule holding. Missing grace periods that end in early 2027 could expose IREN to delay credits, the outlet said.
Before the drop, IREN traded at 3.1x forward sales, below its three-year average of 5.2x.
Broader read-through matters too.
The Financial Times reported Microsoft won’t use an option to more than double its Texas deal with Nscale, raising the question of whether neocloud rentals are slowing across the board. CoreWeave fell 15% on November 5, and its November 10 report should show whether its own deliveries are on time, Yahoo Finance said.
Who is affected
IREN and its shareholders bear the most direct exposure, given the Microsoft contract represents roughly half its contracted run-rate revenue.
Microsoft faces scrutiny over AI capital spending after Azure revenue grew 48% in the September quarter and commercial remaining performance obligation rose 73% to $677 billion, according to Yahoo Finance; Microsoft stock was down 3% on November 5.
Other neoclouds are in the spotlight. CoreWeave’s backlog was about $104 billion at June 30, Yahoo Finance reported. Nvidia also has a stake in the outcome: neoclouds are a key part of its customer base, supported through investments and financial guarantees, Business Insider noted.
What is still uncertain
It has not been disclosed how much of Microsoft’s roughly $5 billion spending shortfall stemmed specifically from IREN.
The sources also do not say whether Microsoft has formally committed to signing off on all three remaining phases by December 31. Whether the requested changes affect the contract’s value has not been disclosed.
Conclusion: What to watch next
The key checkpoint is whether IREN confirms Microsoft’s sign-off on Horizons 2 through 4 by December 31, 2026, and whether the January-February revenue target holds.
CoreWeave’s November 10 report may clarify whether Microsoft is pulling back from neoclouds generally or merely waiting on late capacity. IREN’s financing conditions and any delay credits tied to grace periods ending in early 2027 are also worth monitoring.
Frequently Asked Questions
When does IREN now expect to reach $4 billion in annualized revenue?
IREN said it expects to reach $4 billion in operating annual recurring revenue by January or February, according to Business Insider. It had previously targeted year-end.
Why did Microsoft ask for changes at the Childress site?
IREN co-CEO Daniel Roberts said Microsoft requested relatively inexpensive changes to help support the latest AI models after the first building was delivered in August. The data centers are practically done, with equipment still arriving for commissioning.
How much revenue does the Microsoft contract represent for IREN?
Once all four phases are live, management expects about $1.94 billion a year from the deal, roughly half of the $4 billion in annual run-rate revenue IREN has under contract for 2026, Yahoo Finance reported.
What did IREN report for its fiscal first quarter?
IREN reported $228 million in quarterly revenue and a net loss of $263 million, according to Business Insider. The report came after shares had already fallen about 20% on November 5.
What happens if IREN misses the December schedule?
Yahoo Finance reported that grace periods end in early 2027, and IREN can owe delay credits if they are missed. Analysts' fiscal 2027 revenue forecast of $2.81 billion depends on the schedule holding.
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