Microsoft has finalized a $9.7 billion deal with data-center operator IREN to secure access to advanced Nvidia chips. This move is aimed at alleviating the strain on Microsoft’s infrastructure and supporting AI services like ChatGPT. The tech giant has been facing capacity shortages due to limited access to computing power, which has hindered growth in the sector.
The market responded positively to the agreement, with IREN’s shares surging by as much as 24.7% to a record high before settling for a smaller gain. Dell, the supplier of Nvidia’s GB300 chips to IREN, also saw a slight increase in its trading value. Microsoft plans to utilize approximately $5.8 billion worth of this hardware.
This five-year deal provides Microsoft with a means to expand its computing capacity without the need for constructing new facilities or acquiring additional power sources. These challenges have made it difficult for the company to meet the growing demand for AI services. By partnering with IREN, Microsoft can avoid hefty investments in hardware that may quickly become outdated as new processors enter the market.
Neocloud providers such as CoreWeave and Nebius Group have experienced rapid growth by offering cloud services built on Nvidia chips. Microsoft’s recent $17.4 billion agreement with Nebius underscores the industry’s push to secure hardware in response to the increasing interest in AI.
IREN operates multiple data centers across North America with a total capacity of 2,910 megawatts. The company’s market value reached $16.52 billion following a more than sixfold increase in its shares this year. IREN plans to introduce Nvidia processors in stages through 2026 at its 750-megawatt campus in Childress, Texas. Liquid-cooled data centers capable of supporting around 200 megawatts of IT capacity are also in the works.
Microsoft’s upfront payment will help cover a portion of IREN’s $5.8 billion agreement with Dell. The contract includes provisions that allow Microsoft to exit the deal if delivery targets are not met.
In addition to the IREN agreement, Microsoft also announced a separate multibillion-dollar deal with AI cloud startup Lambda to deploy AI infrastructure using Nvidia hardware. This partnership, which involves tens of thousands of Nvidia GPUs, signifies a significant step forward in Microsoft and Lambda’s collaboration.
The deployment of Microsoft’s first Nvidia GB300 NVL72 cluster in October expands the company’s options for scaling AI workloads beyond its existing data center footprint. These agreements highlight the ongoing competition for computing power as AI adoption continues to grow.
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**See also: UK watchdog flags Microsoft and Amazon for stifling cloud competition**
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