Late Stage Capitalism
Physician, Long-Term Stock Investor with 30 Years of Experience
Older GPUs retaining value after years of rental income is a positive for IREN's GPU-cloud economics. Per @wallstengine, an A100 system with 9,600 GPUs and servers is listed for $59.7 million, about $6,200 per GPU. Against an estimated original rack cost of $25,000 per GPU, that suggests a 25% residual after six to seven years; the GPUs also rented for $2-10 an hour for six years. The residual is based on an asking price, not a sale. x.com x.com x.comÂ
Compute efficiency could multiply the value of IREN's power. Vera Rubin may generate 5x more tokens per MW than GB300, and a new model generation could add another 3x. Dan Roberts reiterated $4B of exit-2026 ARR despite Horizon 2 cabling rumors. The outlook is about $8.5B of 2027 revenue, $15.5B+ of exit ARR and at least $20B of 2028 revenue. x.com x.com x.com x.comÂ
Rising rental rates even for older GPUs strengthen the case that IREN and CoreWeave's compute assets retain value. The quoted a16z data puts year-to-date rental gains at 160% for H200s, 120% for B200s and 35% for H100s; even six-year-old A100s rent for more than at the start of the year. x.comÂ
IREN can recycle capital from operating AI assets into new GPU deployments. Its $363M Wingspire financing is backed by already deployed, revenue-generating servers and networking, freeing invested cash rather than funding newly purchased GPUs directly. Customer prepayments, ATM proceeds and external financing support upcoming projects and a potential major expansion next year. Returns still depend on borrowing costs, GPU cash flows and execution. x.com x.com x.comÂ
IREN might be exposed to a Microsoft capacity-delivery delay. Microsoft said some third-party GPU-as-a-service contracts have been delayed to the second half of FY27, while RHouse Research asked which neocloud committed to deliver capacity in Q4 2026. The provider is unidentified, but that possibility leaves IREN at risk. x.comÂ
IREN needs less capital for GPUs because prepayments and financing cover most costs. Per Dan Roberts, recent three-year deals carry 45%-55% prepayments; these plus ~6% financing covered 96% of Microsoft's GPU cost, and 9% fixed financing plus prepayment covered over 100% at Mackenzie. He says IREN's cash-funded data centers remain largely unencumbered, 2026 is largely sold out, recent deals price at more than twice last year's level, and 2027 demand exceeds capacity several times over. x.comÂ
Lower AI token prices drive more usage, making GPUs scarcer and raising rental rates for neocloud capacity. Gavin Baker reports rising GPU rental prices even as token prices fall; the GPU constraint never left, and higher rental prices make the ARR math work again. x.com x.comÂ
Hardware suppliers and VC keep financing cash-hungry labs and neoclouds, making compute rental prices at CoreWeave, Nebius and IREN look artificially supported. Lab revenue growth is finally plateauing at 800% year over year after roughly tenfold equity gains across the stack over the last decade. The buildout is also crowding out the economy's appetite for debt. x.com x.com x.com x.com x.com x.comÂ
Nvidia GPUs may retain high residual values while memory, power, data centers and chips remain scarce. Ornn Data's chart shows B200 rentals in October still more than twice their January level, with older H200 rentals higher still. This may last longer than expected, but normal depreciation returns once newer generations ramp and supply catches up. x.com x.comÂ
AI agents' productivity over human labor should lift GPU demand and rates for neoclouds. The bottom looks in for CoreWeave, Nebius, Boost Run, Sharon AI and IREN. Gavin Baker says token prices can fall as revenue per GPU rises; paraphrasing Elon, even $38 per GPU-hour can pay off. CoreWeave's five-year fixed contracts may lag current rates; Boost Run has less capacity locked in. If SpaceX takes more growth, slower cash burn could rerate neoclouds, though smaller customers may pay less. x.com … Show more
IREN's risk is who pays for its contracts, not how much compute people want. Its August release shows Microsoft's contract financed at 6.0% investment grade, while $2.4bn for non-investment-grade customers at Mackenzie, led by Blue Owl and PIMCO, costs 9.0%. SoftBank's 10.7% drop, the steepest on the board, fits a funding story. IREN has $4bn of contracted 2026 ARR against $707m of fiscal-year revenue. If the next non-Microsoft financing prices below 9.0%, lenders are looking through the worry. … Show more
Lenders committing billions to neoclouds weaken the case that expansion will be starved of affordable capital. IREN secured $363M of GPU-backed financing and Nebius a $3.5B credit facility. Longer-lived, redeployable Nvidia GPUs are becoming more acceptable collateral; customer prepayments and cash flow from new contracts offer other funding sources as compute demand outpaces supply. x.comÂ
