Microsoft and IREN's $9.7 Billion Artificial Intelligence Deal

IREN, which transitioned from Bitcoin mining to the artificial intelligence sector, drew attention with its $9.7 billion GPU cloud services agreement signed with Microsoft. In an announcement made on Monday, IREN stated that a five-year artificial intelligence infrastructure agreement had been made, indicating that this move has generated significant excitement among investors.

Within the scope of this agreement, Microsoft will provide IREN access to Nvidia GB300 GPU hardware. While it was shared that the total value of the agreement is $9.7 billion, it was also noted that Microsoft made a 20% upfront payment. Additionally, IREN announced that it signed a separate agreement worth $5.8 billion with Dell Technologies for the acquisition of GPUs and related equipment. It was stated that these GPUs would be gradually brought online at the 750 MW Childress campus in Texas by 2026.

IREN expressed that it will finance the investments through its existing cash reserves, customer prepayments, and additional financing sources. IREN’s co-founder and co-CEO, Daniel Roberts, stated that the agreement demonstrates the “power and scalability of the company's vertically integrated AI cloud platform.” Microsoft’s head of business development, Jonathan Tinter, emphasized that IREN’s expertise ranging from data centers to GPU infrastructure has made the company a strategic partner in the artificial intelligence field.

Following the agreement, IREN shares saw a nearly 30% increase in pre-market trading, attracting attention. The stock price is currently trading at $74.51, and the company's shares have gained 489% year-to-date. According to Bernstein analysts, IREN’s expansion into the AI cloud could generate annual revenues of $500 million by early 2026. Analysts revised their price target for the shares to $75; this level was tested immediately after the news.

It is becoming a new trend for companies coming from cryptocurrency mining to shift towards the artificial intelligence sector, leveraging their existing energy infrastructures and data centers. While the unsuitability of ASIC devices for AI operations presents a disadvantage, these firms gain a significant advantage in GPU hosting services due to their robust infrastructures.