Australian Infrastructure Firm Iris Energy Lands $9.7 Billion Microsoft AI Deal

In a landmark announcement that signals a major strategic pivot, Australian infrastructure specialist Iris Energy revealed a monumental $9.7 billion agreement with Microsoft to provide artificial intelligence cloud services. The five-year contract, disclosed Thursday evening, represents an average annual commitment of $1.9 billion and includes a substantial 20% upfront payment from the technology giant, underscoring Microsoft's confidence in Iris Energy's capabilities.

The company's first-quarter fiscal 2026 results, for the period ending September 30, demonstrate the profound impact of its strategic redirection. Revenue surged to $240.3 million, representing a 355% explosion compared to previous periods. The company swung dramatically from a $51.7 million loss in the prior year to a quarterly profit of $384.6 million. Perhaps most strikingly, adjusted EBITDA skyrocketed from a modest $2.5 million to $91.7 million—an astonishing 3,568% increase.

Iris Energy is executing a comprehensive overhaul of its operations, converting its energy-efficient data centers from their original Bitcoin mining purpose to GPU-powered AI computing clusters. This fundamental shift in business model appears to be accelerating rapidly.

At its Childress, Texas facility, the company is fast-tracking expansion with liquid cooling technology to meet Microsoft's specific requirements. Simultaneously, its Canadian operations in British Columbia are undergoing complete conversion from cryptocurrency hardware to GPU infrastructure, with this transition scheduled for completion by the end of 2026.

Should investors sell immediately? Or is it worth buying Iris Energy?

Management has outlined an ambitious roadmap targeting 140,000 operational GPUs by late 2026, which they project will generate $3.4 billion in annual AI cloud revenue. With the company's substantial power portfolio currently operating at only partial capacity, significant additional growth potential remains untapped.

Market Reaction Reveals Sector Volatility

Trading activity on November 6 presented a puzzling picture initially, as Iris Energy shares declined 12.37% to $66.96 during regular trading hours despite the strong quarterly results. This movement contradicted the positive fundamental news, which was released after market close.

The explanation emerged from broader market dynamics: a widespread sell-off across the artificial intelligence sector pressured the entire category of AI-related stocks. However, sentiment shifted dramatically in after-hours trading, with the equity recovering approximately five percent to reach $70.31 as investors reassessed the substantial value of the Microsoft partnership once the emotional selling pressure subsided.

This dramatic intraday reversal highlights both the volatility within the AI sector and the ultimate market recognition of Iris Energy's transformative contract and financial performance.