IREN’s $9.7 billion Microsoft contract enters delivery phase after first facility accepted
Key Facts
IREN’s contract with Microsoft, worth about $9.7 billion in total through 2031, has moved from announcement to execution after Microsoft took delivery of and accepted the Horizon 1 facility in August 2026, according to IREN’s annual report filed with the U.S. Securities and Exchange Commission. IREN announced the agreement on November 3, 2025; it covers dedicated GPU infrastructure services with an average term of five years. The company targets phased delivery of Horizon 2, 3 and 4 during the fourth quarter of 2026, with grace periods that could extend into the start of the second quarter of 2027. That puts phased execution at the center of attention on the deal, following delivery and customer acceptance of its first part. This comes as Microsoft reported strong growth in Azure revenue, correcting the previous draft’s description of the sector as seeing a slowdown that exceeded expectations.
The agreement provides for IREN to make dedicated GPU infrastructure capacity available to Microsoft at its Horizon facilities in Childress, Texas, according to a Form 8-K filing. The units are spread across four facilities, with a planned total technical load of about 200 megawatts, according to IREN’s quarterly report. Capital expenditure associated with the GPU units is about $5.8 billion, and the company said cash flows from the agreement would be used to fund part of it. This means the contract’s large value is paired with capital spending needed to equip the contracted capacity, while revenue realization depends on delivery and acceptance of the phases. Microsoft said at the time of the announcement, according to the Associated Press, that IREN’s experience building and operating a full-stack AI cloud and its secured power capacity made it a strategic partner.
Microsoft’s results for the quarter ended September 30, 2026, show expanding demand for its cloud services: Azure revenue was about $33.165 billion, compared with $22.384 billion in the same quarter of 2025, according to investor relations tables. The company said Azure growth was 48% year over year in the first quarter of its fiscal 2027, versus 40% in the first quarter of the previous fiscal year. Microsoft Cloud revenue also rose 30% in the quarter, according to the earnings release. These figures provide commercial context for the computing capacity agreement, as revenue from services that rely on cloud infrastructure expands. Chief Executive Satya Nadella said the company was "turning our innovation into increased adoption and practical impact across every industry."
Microsoft’s commercial remaining performance obligation rose 73% to $677 billion in the first quarter of fiscal 2027, according to the earnings release. Chief Financial Officer Amy Hood said results exceeded expectations for revenue, operating income and earnings per share. The obligations figure indicates the volume of contracted business not yet recognized as revenue, placing IREN’s multiyear contract in the context of Microsoft’s long-term commercial commitments. Microsoft’s capital expenditure was about $35 billion in the July–September 2025 quarter, with about half allocated to computer chips to support AI and cloud demand, according to the Associated Press. These figures underscore the need to expand computing capacity and the spending required to provide it, alongside Azure revenue growth.
The original announcement of the agreement on November 3, 2025, was accompanied by a 22% rise in IREN shares before the U.S. market opened, according to the Associated Press. In the latest session covered by the available data, the stock closed at $28.84 on October 28, 2026, compared with $25.51 on October 22. Microsoft shares closed at $531.01 on October 28, according to EL7 data. Horizon 1’s acceptance in August came about nine months after the deal was announced, while the other Horizon facilities remain on the target delivery schedule for the fourth quarter. The contract’s total value runs through 2031, with 20% of each phase’s value paid before its scheduled delivery and deducted from subsequent service fees under the agreement’s terms.