Microsoft's AI Investments: $9.7 Billion Deal

Microsoft Corp. (NASDAQ:MSFT) is enhancing its commitment to artificial intelligence (AI) goals by entering into a $9.7 billion cloud capacity acquisition agreement with Australia's IREN Ltd.. The five-year deal includes a 20% upfront payment and provides access to Nvidia-supported GB300 systems, which have been specifically designed for AI workloads in Texas.

IREN CEO Daniel Roberts stated that this partnership could generate approximately $1.94 billion in annual revenue once fully operational. To provide the infrastructure, IREN will purchase $5.8 billion worth of GPUs and related hardware from Dell Technologies Inc.. Following the agreement, IREN's stock rose by over 28% in pre-market trading, while Dell increased by about 4%.

This deal solidifies IREN's growing position among neocloud players; other new AI-focused infrastructure providers include firms like CoreWeave, Nebius Group, and Crusoe. Many of these companies have transitioned from Bitcoin mining to high-performance AI computing. IREN's shares, traded on Nasdaq, have gained over 500% this year, reflecting investor confidence in the company's transformation and the broader AI infrastructure boom. Roberts mentioned that the company is actively in discussions with several major cloud providers, and as the demand for AI computing surpasses traditional cloud expansion, talks have accelerated.

Microsoft's move may be part of a broader strategy to alleviate cloud bottlenecks as Azure struggles to meet the rising AI workloads from clients like OpenAI. IREN plans to gradually install GB300 systems at its Childress facility in Texas, which has a capacity of 750 megawatts, over the course of next year; there is also strong interest for additional installations at the 2-gigawatt Sweetwater Hub near Abilene. This partnership could change the way large tech companies secure AI infrastructure and increase reliance on more agile, specialized operators to keep pace with rising demand in the next phase of the industry.