Pre-market surge! IREN signs a $9.7 billion AI cloud agreement with Microsoft
Microsoft has signed an AI cloud agreement worth approximately $9.7 billion with Australia's IREN Ltd., becoming its largest customer. The agreement is for five years and is expected to bring IREN about $1.94 billion in annual revenue. Following this news, IREN's stock price rose over 21% in pre-market trading. IREN also plans to procure the necessary GPUs and related equipment from Dell for $5.8 billion
According to Zhitong Finance APP, Microsoft Corporation (MSFT.US) has signed an agreement worth approximately $9.7 billion with Australian company IREN Ltd. (IREN.US) to procure artificial intelligence (AI) cloud computing power, becoming the largest customer of this Australian company. Stimulated by this news, IREN surged over 21% in pre-market trading as of the time of publication.
According to a statement released by IREN on Monday, this five-year agreement will provide Microsoft with accelerator systems based on NVIDIA (NVDA.US) GB300 architecture located in Texas, for processing AI workloads. The agreement also includes a 20% advance payment. Sydney-based IREN also announced that it has agreed to purchase GPUs and related equipment from Dell Technologies (DELL.US) for $5.8 billion.
IREN CEO Daniel Roberts stated in an email that once the agreement is fully implemented, it is expected to generate approximately $1.94 billion in annualized revenue, accounting for only 10% of IREN's total capacity, leaving room for the infrastructure provider to sign more contracts and create additional revenue.
He pointed out, "We have always viewed large hyperscale cloud service providers as natural partners. As their computing power needs grow in sync with our AI cloud capabilities, negotiations with several leading companies have noticeably accelerated."
IREN, along with companies like CoreWeave (CRWV.US), Nebius Group (NBIS.US), Crusoe, and Nscale, belongs to the so-called "neoclouds" camp—these data center operators focus on the AI sector and are competing to provide computing power support for large hyperscale cloud service providers and AI companies such as Meta Platforms (META.US) and OpenAI.
Many neocloud companies, including IREN, initially started with Bitcoin mining businesses and have now expanded their computing clusters into the AI field. Driven by the AI boom, NVIDIA's market value has surpassed $5 trillion, and IREN's stock price listed on NASDAQ has increased by over 500% this year.
In recent years, Microsoft has particularly relied on leasing agreements with such neocloud companies to supplement its resources, accelerate the sales of AI services, and meet the demands of clients like OpenAI. The company, headquartered in Redmond, Washington, revealed last week during its earnings report that it is facing a cloud capacity shortage, struggling to fully meet the demand for Azure services.
In Texas, the new systems based on the GB300 architecture will be deployed in phases to IREN's facility in Childress next year, which is planned to support a capacity of 750 megawatts. Additionally, IREN has 2 gigawatts of capacity at its Sweetwater Hub near Abilene in the state, and Roberts stated that there is strong local interest in "large-scale AI infrastructure deployment."
