Microsoft signs $9.7 billion cloud deal with IREN as AI demand swells

Microsoft has agreed a $9.7 billion partnership with data centre operator IREN, granting it access to Nvidia’s latest chips in a move designed to ease the computing bottleneck that has hampered the company’s ability to fully capitalise on the artificial intelligence boom.

The announcement sent shares of IREN (IREN.O) soaring by as much as 24.7% to a record high on Monday, before settling nearly 10% higher. Shares of AI server manufacturer Dell also rose about 1%, as it will supply IREN with Nvidia’s GB300 chips and related equipment under a deal worth roughly $5.8 billion, which Microsoft (MSFT.O) will utilise.

Expanding AI capacity

The five-year deal highlights the AI sector’s intensifying demand for computing power to run applications such as ChatGPT. It comes after several major tech firms reported earnings last week that pointed to capacity shortages constraining their ability to fully benefit from the AI surge.

By partnering with IREN, Microsoft can boost its computing resources without building new data centres or sourcing additional power — two key obstacles to scaling its AI infrastructure. The agreement also allows the company to avoid heavy upfront spending on hardware that risks rapid obsolescence as new generations of chips emerge.

Industry momentum

Soaring demand for AI infrastructure has propelled so-called “neocloud” providers such as CoreWeave (CRWV.O) and Nebius Group (NBIS.O) — which offer cloud services based on Nvidia processors — to the forefront of the AI industry. Microsoft recently entered a $17.4 billion infrastructure agreement with Nebius to further expand its capacity.

IREN, valued at $16.52 billion as of its last close after its shares surged more than six-fold this year, operates several data centres across North America with a combined capacity of 2,910 megawatts.

The company said Nvidia chips would be deployed in stages through 2026 at its 750-megawatt campus in Childress, Texas, alongside new liquid-cooled data centres capable of delivering around 200 megawatts of critical IT capacity.

IREN noted that funding from Microsoft’s prepayment will help finance part of its deal with Dell. However, the contract with Microsoft may be cancelled if delivery deadlines are missed.

In a separate development on Monday, AI cloud start-up Lambda announced a multibillion-dollar agreement with Microsoft to provide Nvidia-powered AI infrastructure, further underscoring the company’s expanding investments in next-generation computing.

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