By MICHELLE CHAPMAN
Microsoft has entered into a $9.7 billion cloud services contract with artificial intelligence cloud service provider IREN that will give it access to some of Nvidia’s chips.
Related Articles Pizza Hut’s parent company says it’s considering selling the chain Trump administration and private investors sign off on $1.4 billion deal with rare earth startups Healey confirms proposed $10K buyouts, $20K retirement incentives for state workers Ticker: Pizza Hut’s parent company says it’s considering selling the chain; Big Tesla investor will vote against Musk’s massive pay package Chrysler recalls 320,000 Jeep plug-in hybrids due to faulty battery that can catch fireThe five-year deal, which includes a 20% prepayment, will help Microsoft as it looks to keep up with AI demand. Last week the software maker reported its quarterly sales grew 18% to $77.7 billion, beating Wall Street expectations while also surprising some investors with the huge amounts of money it is spending to expand its cloud computing infrastructure and address the growing need for AI tools.
Microsoft spent nearly $35 billion in the July-September quarter on capital expenditures to support AI and cloud demand, nearly half of that on computer chips and much of the rest related to 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 secured power capacity makes them a strategic partner,” Jonathan Tinter, president of business development and ventures at Microsoft, said in a statement. “This collaboration unlocks new growth opportunities for both companies and the customers we serve.”
Microsoft also announced new deal with OpenAI last week that pushed the Redmond, Washington, company to $4 trillion in valuation for the second time this year. The agreement gives the software giant a roughly 27% stake in OpenAI’s new for-profit corporation but changes some of the details of their close partnership. Microsoft’s $135 billion stake will be just ahead of the OpenAI nonprofit’s $130 billion stake in the for-profit company.
IREN also said Monday that it signed a deal with Dell Technologies to buy the chips and ancillary equipment for about $5.8 billion. The Australian company anticipates the chips being deployed in phases through next year at its Childress, Texas campus.
Shares of IREN jumped 22% before the opening bell in the U.S. Shares of Microsoft rose slightly,.