IREN Stock Jumps 25% After Securing $9.7 Billion Microsoft AI Deal

TLDR

• IREN signed a $9.7 billion five-year deal with Microsoft to provide AI cloud capacity using Nvidia GB300 GPUs
• IREN’s U.S.-listed shares jumped 25% in premarket trading following the announcement
• The agreement includes a 20% prepayment from Microsoft that will be credited in years three through five
• IREN entered a separate $5.8 billion agreement with Dell Technologies to purchase the necessary GPU hardware
• The hardware will be deployed at IREN’s Texas campus in Childress through 2026, supporting about 200 megawatts of computing power

IREN’s U.S.-listed shares surged 25% to $75.91 in premarket trading on Monday. The Australian data center operator announced a $9.7 billion agreement with Microsoft to provide AI cloud capacity.

IREN Limited, IREN

The five-year contract gives Microsoft access to Nvidia GB300 graphics processing units. These advanced chips will help Microsoft address its ongoing AI capacity shortage.

The deal structure includes a 20% prepayment from Microsoft. This prepayment will be credited back to Microsoft during years three through five of the agreement.

Microsoft has been struggling to meet surging demand for AI computing power. The company’s CFO Amy Hood said last week the capacity crunch would likely extend into at least mid-2026.

This partnership allows Microsoft to expand computing capacity without building new data centers. It also lets them avoid the lengthy process of securing additional power sources.

IREN also announced a separate $5.8 billion agreement with Dell Technologies. Dell will supply the Nvidia GB300 GPUs and other necessary equipment for the Microsoft deal.

Dell shares climbed 4.7% in Monday’s premarket trading on the news. Microsoft stock edged up 0.4% following the announcement.

Hardware Deployment Timeline

The processors will be deployed in phases through 2026 at IREN’s Texas campus in Childress. The site spans 750 megawatts of capacity.

IREN will install new liquid-cooled data centers at the location. These facilities are designed to support about 200 megawatts of critical IT capacity.

The company has multiple data centers across North America with total capacity of 2,910 megawatts. All facilities run on renewable energy sources.

IREN plans to fund the capital expenditures through several sources. These include existing cash, customer prepayments, operating cashflows and additional financing.

Analyst Response

Cantor analyst Brett Knoblauch called the deal “game-changing” for IREN. He believes Microsoft serves as an anchor tenant that will help attract more customers.

Knoblauch raised his price target on IREN stock to $142 from $100. He maintained his Overweight rating on the shares.

The analyst said he’s now more confident that all of IREN’s capacity will be used for AI and high-performance computing. This marks a shift from the company’s cryptocurrency mining origins.

IREN has increasingly pivoted toward AI infrastructure. This puts them in the same category as other neoclouds like CoreWeave.

The company’s market value stands at $16.52 billion. Shares have surged more than six-fold this year before Monday’s jump.

Microsoft’s contract with IREN can be terminated if delivery timelines aren’t met. The phased deployment schedule runs through 2026 at the Childress facility.

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