IREN Secures $9.7 Billion Microsoft Contract to Power AI Infrastructure Demand

2025-12-29 companies

Sydney, Sunday, 28 December 2025.
Pivoting from crypto, IREN’s $9.7 billion Microsoft deal highlights a critical market shift where energy infrastructure, not just chips, now drives the next phase of the AI economy.

The Mechanics of the Microsoft Partnership

The cornerstone of this strategic pivot is a five-year contract finalized in November 2025, under which Microsoft has committed to utilizing 200 megawatts (MW) of IT load at IREN’s data center campus in Childress, Texas [1][6]. This infrastructure will support high-performance computing needs using Nvidia’s GB300 series GPUs, facilitated by a procurement agreement with Dell Technologies valued at approximately $5.8 billion [3][6]. The deal is structured to generate nearly $2 billion in annual recurring revenue for IREN, with Microsoft providing a 20% prepayment to secure priority access to the GPU clusters [1][3]. This arrangement allows Microsoft to expand its computing capacity without the immediate need to construct new facilities or secure independent power agreements [6].

Market Valuation and Analyst Sentiment

As of late December 2025, the market’s response to IREN’s transformation has been complex. The company currently commands a market capitalization of approximately $13.76 billion, yet its stock performance has shown volatility [3]. On December 25, 2025, the stock faced downgrades from “Hold” to “Sell” and has been testing a support zone between $40 and $42 [3]. Despite these short-term pressures and concerns regarding share dilution, the long-term outlook from the analyst community remains largely positive [3]. Recent data indicates an average price target of $69.20, suggesting a potential upside of 71.71% from current levels, with a consensus rating of “Buy” among 12 analysts [5].

The Economics of AI Infrastructure

IREN’s transition underscores a fundamental shift in the AI economy: the bottleneck is moving from chip availability to energy scarcity [1][2]. While semiconductor giants defined the initial phase of the AI boom, infrastructure providers are becoming the new linchpins of the sector [2]. IREN’s vertically integrated model—owning the data centers, electrical infrastructure, and hardware—has yielded gross margins of 76% [7]. In comparison, competitors like Bitdeer, which are also pivoting from crypto-mining but with different operational models, report gross margins of 35% [7]. This efficiency is paramount as IREN plans a staggering $11.6 billion in High-Performance Computing (HPC) capital expenditures to meet future demand [7].

Sources

Artificial Intelligence Data Centers