- IREN stock continued its strong downward trend this week.
- Ken Griffin has delivered a major warning on the AI bubble.
- The AI Bubble Index has jumped to the extreme zone of 74.
IREN stock has slumped to its its lowest level since September last year as its pivot from Bitcoin mining to the artificial intelligence (AI) industry faces some major headwinds. It dropped to $26.62 on Tuesday as billionaire Ken Griffin warned that we are in an AI bubble.
IREN Stock Has Slumped as the AI Bubble Index Jumps
Top experts are sounding the alarm about the artificial intelligence bubble. The most recent to warn was billionaire Ken Griffin, who compared the current phase to the dot-com bubble when most technology companies plunged. The closely watched AI Bubble Index has jumped to the extreme level of 74.
Ray Dalio, the founder of Bridgewater Associates, also warned about the bubble, saying that the rising bond yields and interest rates would push it to burst. Indeed, the benchmark ten-year yield jumped to a two-decade high of 5.3% earlier this month. Market participants are predicting that the Fed will hike rates again in December.
Most importantly, Gartner (NYSE: IT) has warned that neocloud companies will need to announce billions of dollars in impairments in 2030. The report warned that these companies are more at risk because they focus on providing computing power to firms in the AI industry.
According to the WSJ, Anthropic’s S1 shows that the company plans to spend over $750 billion in infrastructure in the next few years. The company, which is a top client of neoclouds, lost over $80 billion in the first six months of the year.
IREN is facing other challenges. For example, after announcing the $9.3 billion with Microsoft last year, it has not made a similar announcement this year. Its recent deal was with several AI labs like Perplexity AI and Reflection AI in a deal worth about $2.8 billion.
IREN’s debt is also soaring. It ended the last quarter with over $7.8 billion in debt, up sharply from what it had in the same period last year. This debt surge will likely continue rising. Also, there are valuation concerns since it is valued at over $10 billion.
IREN Share Price Technical Analysis
IREN stock chart | Source: TradingView
Technicals suggest that IREN stock has more downside risk to go. It has already plunged below the crucial support level of $28.8, its lowest level in July, confirming the bearish breakout. Moving below that level invalidated the bullish double-bottom pattern.
The stock has slumped below the 50-day moving average and is attempting to move below the ultimate support of the Murrey Math Lines tool. Also, the ADX index has jumped, a sign that the sell-off is accelerating. Therefore, the stock will likely continue falling towards the psychological level of $20.