IREN delivers first Microsoft AI data center under $9.7 billion deal

Microsoft's acceptance of Horizon 1 starts the revenue clock on IREN's $9.7 billion AI cloud contract.

Microsoft's sign-off on IREN's first 50MW AI cloud deployment converts a $9.7 billion contract into monthly invoicing, the clearest evidence yet that the Bitcoin miner's pivot to AI infrastructure is generating cash rather than just construction.

"Delivering Horizon 1 demonstrates the strength of our vertically integrated model and our ability to execute complex AI infrastructure projects at speed and scale," Daniel Roberts, co-founder and co-CEO of IREN, said.

Horizon 1 is the first of four 50MW direct-to-chip liquid-cooled deployments at IREN's Childress, Texas campus under the five-year cloud services agreement announced in November 2025. NVIDIA granted the GB300 NVL72 deployment Exemplar Cloud status after testing, a designation that shows the system can handle demanding AI workloads with performance and reliability.

Once all four Horizons are running, the contract should generate roughly $1.94 billion in annualized run-rate revenue, with a 20 percent customer prepayment already in place. IREN targets 480MW of gross AI cloud capacity in 2026 and 1.2GW in 2027, capacity that extends well past the 200MW Microsoft has contracted.

Why acceptance matters more than construction

Microsoft has a five-day window to test each GPU deployment against agreed criteria. Acceptance starts the contractual service term, letting IREN invoice monthly and move the project from work-in-progress to recognized revenue. The company reported $511.5 million in Bitcoin mining revenue over the nine months through March against $58.3 million from AI Cloud, so the new revenue line is still catching up to the legacy business it is designed to replace.

The buildout carries a heavy price tag. The Microsoft contract requires roughly $5.8 billion of GPUs and related equipment purchased through Dell Technologies. IREN closed a $3.65 billion financing package in June, split between a $2.10 billion private placement priced at SOFR plus 213 basis points and a $1.55 billion delayed-draw term loan at SOFR plus 225 basis points, with a 6 percent blended cost of debt after hedging. Short seller Jim Chanos has questioned the economics, warning, "This is a financing deal, w/IREN taking all the risk."

NVIDIA designation broadens the pitch

The Exemplar Cloud status could help IREN court enterprise and hyperscaler customers beyond Microsoft, which matters because the company's 2026 and 2027 capacity targets run well past the 200MW Microsoft has contracted. Management targets more than $4 billion in AI Cloud annualized run-rate revenue by year-end, with 85 percent already under contract.

The designation also gives IREN a reference point against rivals making the same mining-to-AI shift. Applied Digital, Core Scientific and TeraWulf are all building out AI infrastructure on former Bitcoin mining sites, but none has yet secured a hyperscaler contract of Microsoft's scale. IREN's acceptance, by contrast, locks in a named customer with a five-year commitment and a prepayment that de-risks part of the buildout.

IREN shares rose 6 percent to $46.42 in Thursday midday trading, while those same peers barely moved, confirming the rally is company-specific execution rather than sector rotation. The stock carries a Buy rating with a $100 price target from the most recent analyst coverage. IREN reports earnings at the end of August, with the Street looking for a loss of $0.46 per share on revenue of $140 million; delivery timing on Horizons 2 through 4 and whether Exemplar Cloud status converts into customers beyond Microsoft will be the key questions.

This article is for informational purposes only and does not constitute investment advice.