$IREN · Parkev Tatevosian, CFA · 2026-10-28

Iren and Applied Digital are among the AI companies that have been hit hard by growing concerns about unit economics and the sustainability of the AI sector.

Investors are concerned that after the spending boom coming in the next few years , there will be a significant slowdown, and among the companies most at risk are Iren and Applied Digital.

However, I thought it was a buying opportunity, and I recently upgraded the Iren and Applied Digital stocks to Buy Opportunities.

Now, investors are asking me which one is better for me since I have rated them both as buying opportunities. This is the question I will answer in this video, where I will compare them directly through a few important metrics, as well as look at valuation differences to determine which I see as a better investment today for investors with a high risk tolerance, because these stocks are among the riskiest in the market right now.

One of the reasons that attracts investors to these two companies is the tremendous revenue growth that is expected to continue for the next few years.

and Iren generating $707 million. Over the next three years, you can reasonably expect these companies' revenues to double compared to what they are today. This is due to their having billions of dollars in accumulating orders.

They can generate revenue from data centers to the extent that they can build them at the moment.

But the question remains: what will happen to these contracts when they are due to be renewed in two, four , or six years from now ? Will the supply and demand situation remain as it is today, with demand exceeding supply, thus raising computing costs and benefiting companies that build, lease, or own these computing assets?

Or will the situation in the sector reverse and lead to a surplus in supply, resulting in a sharp drop in prices due to over- construction? This is the question mark that investors are trying to answer right now .

Another reason for investors to be concerned about some companies in the sector, including Iren and Applied Digital, is unit economics.

Many of them are losing huge amounts of net profit, and more specifically, Iren achieved a negative operating profit margin of 54%, and you can see this metric in purple going in the wrong direction.

Of course, when you look at companies that are losing a lot of money, the balance sheet becomes even more important. You need to know how much debt they have, and how much cash they have available, to determine whether they need to go back to investors and ask for more capital, which could dilute shareholders' stakes.

When measuring long-term debt, we find that I rent has more, worth 7.84 billion, It is very likely that the debt of these companies will increase over the next few years, and although interest rates for borrowing by these companies have risen significantly over the past month, the good news is that they have fallen slightly over the past week.

So, I also wanted to take a look at how much cash and short-term investments are in their balance sheets, and here I rent looks better positioned with 7.6 billion,

Now that we have looked at the performance metrics, I wanted to move on to the evaluation , starting with the price-to-forward sales ratio. I rent shares are trading at their lowest price-to-sales ratio in years, at 1.3.

Applied Digital is trading at a valuation that is roughly double that of I rent according to this specific metric. But you can see how both are trading near their record lows in terms of the price-to-sales ratio for futures.

This is one of the reasons that prompted me to upgrade these stocks to buy opportunities two weeks ago.

After all these calculations, I concluded that the value of an Irent share is $46. The current market price is $25. It seems to me that the stock is significantly undervalued by 84%.

Therefore, both appear to be undervalued , and again, that is why they are being upgraded to a buy opportunity. Now, to answer the question of which is better, it is not an easy decision. There are advantages and disadvantages to each.

While "Any Rent" had a more discounted valuation compared to the current market price. In general, if I had to make a decision today about which one to buy, I would choose "Any Rent", but it would be a difficult and close choice.

I have rated them both as buying opportunities. No one is forcing you to choose just one of these two companies. If you are interested in both, you can add them together to your investment portfolio.

But let me remind everyone that these two stocks are among the riskiest stocks you can own right now. So, if you are interested in them, make sure you are prepared to take those high risks.

These stocks are extremely volatile and can fall by large percentages in any given day or week. For this reason, I suggest that they should only be considered by investors with a high risk tolerance.