$9.7 Billion Valuation from Microsoft

Microsoft has signed a cloud services contract valued at $9.7 billion with artificial intelligence cloud service provider IREN. This agreement will not only provide access to some of Nvidia's chips but also support Microsoft's expansion efforts to meet the growing demand for artificial intelligence.

The five-year contract includes a 20% upfront payment, and Microsoft reported last week that its quarterly sales reached $77.7 billion, an increase of 18%. This surpassed Wall Street expectations, surprising some investors with its significant spending to expand cloud computing infrastructure and meet the rising need for artificial intelligence tools.

In the July-September quarter, Microsoft invested nearly $35 billion to support artificial intelligence and cloud demand. Almost half of this spending was directed toward computer chips, while the rest went to data center real estate.

Jonathan Tinter, Microsoft’s Head of Business Development and Ventures, noted that IREN's expertise in building a fully integrated artificial intelligence cloud from data centers to GPU stacks and its secure power capacity made it a strategic partner. Tinter stated, "This collaboration opens up new growth opportunities for both companies and the customers we serve."

Last week, Microsoft announced a new agreement with OpenAI, which enabled the Redmond, Washington-based company to reach a valuation of $4 trillion for the second time in 2023. The agreement allows the software giant to acquire approximately 27% equity in OpenAI's newly profit-seeking enterprise.

IREN also announced that it has signed a deal with Dell Technologies to acquire chips and auxiliary equipment valued at approximately $5.8 billion. The Australian company anticipates that these chips will be progressively utilized at its Childress, Texas campus starting next year.

IREN's shares rose by 22% before the opening of the US stock market, while Microsoft shares showed a slight increase.