After a brutal day for tech stocks, shares of neocloud IREN and cloud infrastructure firm Akamai rebounded Friday, thanks to their earnings reports.
IREN shares rose 19% in early trading Friday following its report late Thursday. The gain was set to wipe out a 17% loss from the previous session, caused fears that Democrat victories in midterm elections will slow data-center construction. However, the stock is still down more than 40% this year so far.
IREN builds and operates its own renewable-powered data centers. It has multiple projects in Texas, where Governor-elect Gina Hinojosa has called for new approvals on data centers to remain on pause until the state legislature can meet next year to pass "real protections" for local communities.
Kent Draper, chief commercial officer of IREN, told Barron's the company doesn't expect a major impact on its operations as a large portion of its capacity is already under construction.
"Some of our earlier stage projects in Texas... may be affected by whatever rules come in," Draper said. "But when you look at her comments, what she's saying is not just an outright moratorium on data centers, but she's saying that Texans need to benefit... and that is something that we have been conscious of from day one."
IREN's revenue met analyst expectations of $228 million for the quarter ending in September, while losses per share were 66 cents versus the 72 cent loss analysts polled by FactSet were expecting. It wasn't clear if the FactSet estimates directly correlated with the numbers reported by IREN.
The company said overall artificial-intelligence quarterly revenue increased 182% compared to the quarter ending in June, coming in at $200 million or nearly 88% of total revenue.
IREN reported a net loss of $263 million, more than the $224 million analysts were expecting. It said it made $385 million in the same period last year.
Elsewhere in the cloud-computing sector, Akamai stock gained 6.7% Friday after its own earnings beat analyst estimates, although revenue came in just shy of expectations. Akamai is known for its cybersecurity offerings, but has seen its cloud and infrastructure business segment become a standout this year.
"We believe that if AI data centers face greater challenges from obtaining approvals due to the recent shift in political landscape, Akamai could be a net beneficiary as it has a more distributed infrastructure that is not reliant on large footprint (and easily targeted) data center buildouts," wrote William Blair analyst Jonathan Ho in a research note Friday.
For the third quarter ending in September, Akamai's revenue came in at $1.112 billion on earnings of $1.77 a share. Analysts were expecting $1.118 billion and $1.67 a share.
The company's outlook for the current quarter ending in December also came in soft. While analysts were expecting earnings of $1.79 a share, the company guided at $1.50 to $1.70. Likewise, they were expecting revenue of $1.199, but the company is only anticipating that to come in at $1.145 billion to $1.170 billion.
Shares of the firm, which recently announced an $11.6 billion deal to supply computing services to Anthropic, fell more than 9% in regular trading on Thursday.
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