IREN's stock is soaring. Why its new Microsoft deal could be 'game-changing.'

By Christine Ji

Microsoft's latest $9.7 billion deal shows why specialized data centers are becoming critical partners in the race to build AI

To fulfill the contract, IREN will purchase $5.8 billion in GPUs and related equipment from Dell Technologies.

Microsoft Corp. has just moved to secure more artificial-intelligence computing capacity through a $9.7 billion deal with the data-center operator IREN Ltd.

Microsoft (MSFT) will enter into a five-year cloud-services contract with IREN (IREN) to utilize Nvidia Corp. (NVDA) graphics processing units at IREN's Childress, Texas, campus. The deal features a 20% prepayment from Microsoft, signaling the Big Tech company's upfront commitment. To acquire the GPUs and other related equipment, IREN has entered into a $5.8 billion agreement with Dell Technologies Inc. (DELL)

The deal, which covers 200 megawatts of capacity, catapults IREN into the big leagues of AI infrastructure providers with a Big Tech tenant that gives the company more legitimacy. In a Monday note, Cantor Fitzgerald analyst Brett Knoblauch called the agreement "a game-changing deal for IREN, as it gets them an anchor tenant" that's "critical for IREN [to] get the customer-acquisition flywheel going." Shares of IREN were up 21% in premarket trading on the news.

The GPUs will be deployed in phases through 2026 along with liquid-cooling solutions at the Childress campus.

High-profile deals between Big Tech companies and smaller data-center operators are becoming more common, as companies race to secure AI-computing capacity. Partnering with IREN means Microsoft can expand its access to power without costly capital expenditures to build the underlying data centers. For IREN, which has been undergoing a business pivot from a bitcoin miner to a high-performance computing provider, the AI boom is a more lucrative way to use its underlying infrastructure.

Other former bitcoin miners, such as TeraWulf Inc. (WULF) and Cipher Mining Inc. (CIFR) - which have received backing from Alphabet Inc. (GOOGL) (GOOG) - have also followed this playbook.

"Together with IREN, Microsoft is delivering cutting-edge AI infrastructure for our customers," Microsoft President of Business Development and Ventures Jonathan Tinter said in a statement. "IREN's expertise in building and operating a fully integrated AI cloud - from data centers to GPU stack - combined with their secured power capacity makes them a strategic partner."

The deal follows Microsoft's September agreement to use AI-computing capacity from the neocloud Nebius Group NV (NBIS). The deal is another five-year agreement that could be valued at nearly $20 billion.

Knoblauch reiterated his overweight rating on IREN and raised his price target to $142 from $100 on the news of Monday's deal. He said IREN is still trading at around a 75% discount from its neocloud peers relative to the company's contracted megawatts.

Read on: Nebius' stock is surging. Why Microsoft just inked a deal with the cloud company.

-Christine Ji

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11-03-25 0845ET