Core Insights - The main constraint for scaling artificial intelligence (AI) is not the ideas or algorithms but the power and compute capacity required to support it [1] - Companies that provide tangible infrastructure for AI, such as power-rich builders and GPU cloud providers, are positioned to benefit from the growing demand for AI compute [2] Company Highlights - Iris Energy, originally a Bitcoin miner, is transitioning to AI compute with significant power access, having secured 2.75 gigawatts of grid connections in West Texas, enough to power approximately 2 million homes [4] - On November 3, 2025, Iris Energy announced a five-year, $9.7 billion contract with Microsoft for GPU cloud computing services, marking a significant validation of its pivot strategy [5] - The contract includes phased deployment of GPU capacity at Iris's Childress, Texas campus, which has a total capacity of 750 megawatts, supported by new liquid-cooled data centers [6] - Iris Energy also reached a $5.8 billion agreement with Dell Technologies for the purchase of GPUs and additional infrastructure, which will be funded through various financial sources [7] Industry Trends - Infrastructure operators with substantial backlogs are becoming increasingly valuable as they provide exposure to AI compute growth without the high valuations associated with megacap tech companies [8] - The value of power capacity and contracted megawatts is rising, indicating a shift in focus from software features to the physical infrastructure needed for AI [8] - Recent hyperscaler agreements demonstrate that specialized GPU infrastructure can effectively capture enterprise spending at scale [8]

Core Insights - IREN Limited has signed a five-year agreement with Microsoft for GPU cloud computing services valued at approximately $9.7 billion [1] - The contract includes a 20 percent prepayment and allows Microsoft access to NVIDIA GB300 GPUs managed by IREN [1] - The phased deployment of GPU capacity will occur throughout 2026 at IREN's Childress, Texas campus, which has a total capacity of 750 megawatts [1] Investment and Infrastructure - IREN is developing four new liquid-cooled data centers, named Horizon 1 through Horizon 4, which will support a critical IT load of 200 megawatts [2] - The company has also reached an agreement with Dell Technologies for the purchase of GPUs and additional infrastructure, valued at about $5.8 billion [2] - Funding for these investments will come from existing cash, Microsoft's prepayments, operating cash flow, and new financing [2] Market Reaction - The deal represents IREN's first major hyperscaler tenant, a significant milestone for the company, which was previously a Bitcoin miner [3] - Following the announcement, IREN's stock rose by 21%, reaching $73.89 in pre-trading hours [3]