Microsoft has signed a $9.7 billion cloud services contract with artificial intelligence cloud services provider IREN, which will give it access to some of Nvidia’s chips.
The five-year deal, which includes a 20% upfront payment, will help Microsoft keep up with AI demand. Last week, the software maker reported that its quarterly revenue grew 18% to $77.7 billion, beating Wall Street expectations while surprising some investors with the huge sums it is spending to expand its cloud computing infrastructure and meet the growing need for AI tools.
Microsoft spent nearly $35 billion on capital expenditures in the July-September quarter to support AI and cloud demand, with nearly half of that on computer chips and much of the rest on data center real estate.
“IREN’s expertise in building and operating a fully integrated AI cloud – from data centers to GPU stack – combined with their secure power capacity makes them a strategic partner,” said Jonathan Tinter, president of business development and ventures at Microsoft, in a statement. “This collaboration unlocks new growth opportunities for both companies and the customers we serve.”
Microsoft also announced a new deal with OpenAI last week, taking the Redmond, Washington company to a $4 trillion valuation for the second time this year. The deal gives the software giant a roughly 27% stake in OpenAI’s new profitable venture, but changes some details of their close partnership. Microsoft’s $135 billion stake will just exceed nonprofit OpenAI’s $130 billion stake in the for-profit company.
IREN also said Monday that it has signed a deal with Dell Technologies to buy the chips and associated equipment for about $5.8 billion. The Australian company expects the chips to be deployed on a phased basis at its campus in Childress, Texas, until next year.
Shares of IREN rose 22% before the opening bell in the US. Microsoft shares rose slightly.
