Microsoft's change request delays a $9.7 billion Texas AI data center

IREN, a cloud company backed by Nvidia, says changes Microsoft asked for have delayed a huge AI data center project in Childress, Texas. The company now expects to reach $4 billion in yearly recurring revenue by January or February. It had earlier aimed for the end of this year.

What happened

IREN is building the site in four phases under a $9.7 billion contract with Microsoft. The first building was delivered in August. Microsoft then asked for changes to networking equipment, which IREN's co-CEO Daniel Roberts described as relatively inexpensive. They help support the latest AI models. Roberts said the data centers are practically done and the company is waiting for the remaining equipment to arrive. He called the Microsoft relationship great.

Last week Microsoft said it spent $5 billion less than expected on AI infrastructure because outside cloud providers were late. It named no names. Satellite images analyzed by research firm Aterio pointed to IREN and Nebius.

The bigger picture

IREN is a so-called neocloud, a company that rents AI computing power to businesses. These firms have faced power shortages and construction setbacks. IREN also said it is slowing expansion plans because financing is harder to get, though customer demand remains strong.

Its shares fell sharply Thursday, then rebounded after hours. The company reported $228 million in quarterly revenue and a $263 million net loss.

What is not known

The material does not say exactly when the remaining equipment will arrive or when all four phases will be finished.