"A lot of the hoopla started when investors questioned Oracle's ( NASDAQ:ORCL) heavy debt load for the OpenAI deal. Capital expenditures came under pressure, and people wondered how OpenAI would be able to pay $300 billion over five years. That contract starts in 2027, and rumors circulated that OpenAI pushed back its data center completion to 2028, a year later than initially planned. It put more pressure on AI data center providers like IREN, even though Oracle refuted the rumor on the same day."
"Investors were also rattled by Broadcom's ( NASDAQ:AVGO) earnings in December due to tightening margins. However, its AI segment is still robust. That part of the business grew by 74% year-over-year in Q4 FY25, and Broadcom anticipates AI sales doubling year-over-year in Q1 FY26. IREN and other AI stocks moved down in sympathy with this news. A debunked rumor with Oracle and OpenAI, two companies that don't impact IREN's finances, and Broadcom's soaring AI business, was enough to crash IREN."
"IREN also issued $2.3 billion worth of debt in December, but more than a quarter of that money went toward repaying debt with higher interest rates and shorter maturities. IREN needs money to finance its AI data centers, so it makes sense that the company has to borrow some money. It got great terms and got rid of its less favorable debt."
IREN surged over 1,000% from April to October as investors recognized its position addressing the AI energy bottleneck and winning big tech deals. The stock later fell more than 40% from its all-time high amid market jitters and a debunked rumor about Oracle and OpenAI delaying data center timelines. Broadcom's earnings and concerns about margins also pressured AI stocks despite Broadcom's strong AI growth. IREN issued $2.3 billion of debt in December, using a portion to refinance higher-cost debt, while borrowing to fund AI data center expansion and preserve long-term capacity.
Read at 24/7 Wall St.
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