Microsoft has struck a USD 9.7 billion deal with data-center operator IREN that includes access to Nvidia's advanced chips, aiming to ease the computing crunch that has kept the tech giant from fully cashing in on the artificial intelligence boom. The five-year agreement represents a significant investment in AI infrastructure amid growing demand for computing power.

Market Response and Financial Details

The news sent IREN shares up more than 20% in premarket trading on Monday. IREN, which has a market value of USD 16.52 billion after a more than six-fold surge in its shares this year, will benefit significantly from Microsoft's prepayment structure. AI-server maker Dell rose 5% following the announcement, as it would provide IREN with Nvidia's GB300 chips and other equipment, at a cost of about USD 5.8 billion. Cash from Microsoft's prepayment will help finance part of IREN's USD 5.8 billion Dell deal, according to a company filing.

Strategic Partnership Structure

Partnering with IREN allows Microsoft to expand computing capacity without building new data centers or securing additional power, two of the biggest hurdles to meeting surging AI demand. The arrangement also helps Microsoft sidestep heavy capital spending on chips that will lose value as newer, more powerful processors arrive. IREN operates multiple data centers across North America with a total capacity of 2,910 megawatts. Its facilities are powered entirely by renewable energy, providing Microsoft with sustainable computing infrastructure.

Deployment Timeline and Infrastructure

The Nvidia processors are scheduled for phased deployment through 2026 at IREN's 750-megawatt Childress, Texas, campus, alongside new liquid-cooled data centers designed to deliver about 200 megawatts of critical IT capacity. This timeline aligns with Microsoft's expectations for an extended capacity crunch. Microsoft's contract with IREN could be terminated if the company fails to meet the delivery timelines, and the agreement could be amended to include performance requirements.

Industry Context and Capacity Challenges

The deal reflects the AI industry's growing hunger for computing power to run applications such as ChatGPT. It follows earnings from major tech companies that underscored capacity shortages were limiting their ability to fully benefit from the AI boom. Microsoft CFO Amy Hood said the company now expects its AI capacity crunch to stretch into at least mid-2026, after previously predicting improvements would come later in 2025. This extended timeline demonstrates the persistent nature of computing capacity challenges facing major technology companies in the AI sector.

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