Microsoft Strikes $9.7 Billion AI Cloud Partnership With IREN

Microsoft Corp. has entered a massive $9.7 billion agreement with IREN Ltd. to secure artificial intelligence (AI) cloud capacity, marking the Australian company’s largest-ever customer deal.

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Under the five-year partnership, Microsoft will gain access to Nvidia Corp. accelerator systems housed in Texas and built on the GB300 architecture, designed to handle advanced AI workloads. According to a statement from IREN on Monday, the agreement includes a 20% upfront payment from Microsoft. To fulfill the contract, IREN has also committed to purchasing $5.8 billion worth of GPUs and related equipment from Dell Technologies Inc.

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Once fully executed, the deal is projected to generate roughly $1.94 billion in annualized revenue, IREN’s Chief Executive Officer Daniel Roberts said in an emailed statement. He added that Microsoft’s agreement will utilize only about 10% of IREN’s total data capacity, giving the Sydney-based company significant room to onboard additional customers and boost future earnings.

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“We’ve long considered major hyperscalers to be our natural partners,” Roberts said. “We’ve been in active discussions with several of them, and those talks have accelerated as both their computing needs and our AI cloud capabilities continue to grow.”

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IREN belongs to a rapidly emerging group of AI-focused data center operators known as “neoclouds.” This group which also includes CoreWeave Inc., Nebius Group NV, Crusoe Inc., and Nscale competes to provide large-scale computing power to tech giants like Meta Platforms Inc. and AI developers such as OpenAI.

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Interestingly, many of these companies began as Bitcoin mining operations before shifting their infrastructure toward high-performance computing to serve the exploding AI market. For IREN, that pivot has paid off handsomely its NASDAQ-listed shares have surged more than 500% this year, fueled by investor enthusiasm over the AI revolution that has also propelled Nvidia to a staggering $5 trillion valuation.

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Microsoft’s move highlights how major tech firms are increasingly partnering with specialized infrastructure providers to meet their soaring AI demands. The company has been aggressively expanding its cloud footprint through leasing agreements with neocloud players to bolster its Azure platform, which underpins many of its AI services including those that support OpenAI’s models.

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During its recent earnings report, Microsoft acknowledged that it has struggled to keep pace with the overwhelming demand for cloud capacity. By tapping external partners like IREN, the tech giant aims to accelerate its infrastructure buildout while maintaining the performance and scale needed for enterprise-level AI solutions.

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In Texas, IREN plans to deploy the GB300 systems in phases throughout next year at its Childress facility, which is expected to support 750 megawatts of power capacity. Roberts noted that the project’s phased rollout will enable Microsoft to begin leveraging the new systems as they come online, ensuring a steady expansion of available compute resources.

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Beyond Childress, IREN also operates a 2-gigawatt (2GW) hub in Sweetwater, Texas, near Abilene, where it’s witnessing “strong demand for large-scale AI infrastructure deployments,” Roberts added. The company is positioning these sites as critical hubs in the global race to deliver scalable, energy-efficient computing environments optimized for AI.

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This latest collaboration underscores the intensifying competition among AI infrastructure providers and the ongoing efforts by hyperscalers like Microsoft to lock in long-term access to advanced computing resources. As AI adoption accelerates across industries from cloud computing and cybersecurity to healthcare and robotics the ability to secure reliable, high-performance capacity has become a strategic necessity.

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For IREN, the deal not only cements its reputation as a leading AI cloud provider but also establishes a foundation for future partnerships with other major tech players seeking to expand their AI operations. With ample unused capacity and growing investor confidence, the company appears well positioned to capitalize on the ongoing surge in global demand for AI computing power.

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Meanwhile, for Microsoft, the agreement serves as a crucial step in strengthening its Azure AI infrastructure as it competes head-to-head with Amazon Web Services and Google Cloud in the race to dominate the AI cloud market.

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By securing additional capacity from specialized providers like IREN, Microsoft is signaling its intent to stay ahead of the curve ensuring it can continue delivering the massive computational scale that modern AI applications demand.

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