IREN Limited shares advanced in afternoon trading on Tuesday after the data-center operator secured a $3.65 billion financing package tied to its massive Microsoft AI cloud contract. The deal signals a shift from negotiation to execution, as the company moves to convert contracted demand into operational capacity.
The stock gained 3.8% to $67.79 by 1:55 p.m. ET, after touching a session high of $69.53. Trading volume exceeded 32 million shares, pushing the company's market capitalization to approximately $22.6 billion.
The investment-grade debt facility, rated by agencies as relatively lower risk, will be used to purchase graphics processing units (GPUs) for the Microsoft contract. GPUs are essential chips for training and running artificial intelligence models. The company stated that the package, combined with customer prepayments, covers roughly 96% of the $5.81 billion in GPU capital expenditures required for the Microsoft deal.
The financing mix includes a $2.10 billion U.S. private placement and a $1.55 billion delayed-draw term loan, with a blended cost of 6.00%. Pricing references the Secured Overnight Financing Rate (SOFR), which is backed by Treasury collateral. According to a U.S. filing, IREN's IE US Hardware 3 subsidiary signed off on the agreements, dated May 29, covering approximately $1.5 billion in delayed-draw loans and $2.1 billion in 5.96% senior notes maturing Dec. 31, 2031. The debt is secured by GPU assets and cash flows from the Microsoft contract.
IREN co-founder and co-CEO Daniel Roberts said the deal underscores the "quality of our customer contracts" and "lowers our cost of capital as we scale." Goldman Sachs and J.P. Morgan acted as joint lead managers and arrangers.
The $9.7 billion, five-year cloud contract with Microsoft, announced in November, is designed to secure access to Nvidia chips and alleviate Microsoft's AI computing constraints without requiring it to build all its own data centers and secure power. However, the contract includes a termination clause if IREN falls behind on delivery, according to Reuters.
This financing follows IREN's announcement last week of plans to purchase approximately $1.6 billion of Dell air-cooled Blackwell systems for its Childress, Texas site, with commissioning targeted for early 2027. The company said this system could boost its annualized run-rate revenue to $4.4 billion, up from $3.7 billion. Roberts noted that the primary constraint for AI customers is "time-to-compute," or how quickly they can utilize the computing power they purchase.
Wall Street has turned more bullish on IREN following its recent contract wins. B. Riley Securities analyst Lucas Pipes maintained a Buy rating and raised his price target to $88 from $83, citing a "meaningful" acceleration in hyperscale contracting speed and volume. However, risks remain, including a minimum debt-service coverage ratio requirement and potential defaults that could trigger repayment. IREN's parent company faces limited guarantee risk if Microsoft cancels a tranche and the resale of GPUs falls short.
Nvidia continues to back IREN, with a May agreement to collaborate on up to 5 gigawatts of AI infrastructure. Nvidia also obtained an option to buy up to 30 million IREN shares at $70 each over five years, subject to certain conditions. Nvidia CEO Jensen Huang remarked that "AI factories are becoming foundational infrastructure."
