Microsoft and IREN's $9.7B AI Deal Could Spark MSFT Stock Rally

In early October, Microsoft Corp. (NASDAQ: MSFT) and IREN Limited (NASDAQ: IREN) announced a $9.7 billion partnership. The deal, which runs through 2031, will give Microsoft access to NVIDIA Corp. (NASDAQ: NVDA) G8300 GPUs.

This is a notable example of the trend towards infrastructure as a service (IAAS), driven by the need for scalable data centers to meet the growing demand for artificial intelligence (AI).

Analysts view IAAS as the next wave of the AI infrastructure trade, and IREN is leading the way.

The Microsoft deal will bring IREN recurring, large-scale revenue.

Even with the $9.7 billion spread out over the next five years, $1.94 billion a year is more than 3x IREN’s revenue for its entire fiscal year 2025.

Unsurprisingly, IREN stock is up about 33% since Oct. 2. By contrast, MSFT stock has declined 2% over the same period. While that might reflect the scale of Microsoft’s $3 trillion market cap, it overlooks four key long-term benefits that make this partnership a meaningful strategic win for both companies.

1. Microsoft’s AI Capacity Scales Without Heavy CapEx

Microsoft has committed billions of dollars to building data centers. After initially cheering that decision, investors have started to express concerns about when Microsoft will start seeing a return on that investment, as building data centers from the ground up is both capital-intensive and slow.

That’s a key reason to like the deal with IREN. Through IAAS, Microsoft can add AI-ready compute capacity quickly and efficiently. The deal doesn't replace its capital expenditure (CAPEX) spending; it supplements it in a way that supports Microsoft's margins while still fueling growth.

2. Microsoft’s AI Energy Strategy Strengthens

In addition to being capital-intensive, these data centers are energy hogs. And in the United States, energy constraints are becoming more apparent—even with oil companies pumping at record levels.

This is another area where IREN adds significant value. Its facilities use renewable, low-cost energy, which helps Microsoft scale its AI infrastructure sustainably, not only providing a competitive advantage but also helping the company meet its pledge to be carbon-negative by 2030.

3. Azure Gains Edge and AI Advantage

To deliver AI at the edge—closer to end users—Microsoft must deploy infrastructure across diverse geographic locations. Partnering with IREN allows Microsoft to extend its Azure platform closer to where it's needed. This will increase latency, resilience, and redundancy—three key factors that public and private customers consider.

4. Microsoft’s Competitive Positioning Increases

Yet another benefit to Microsoft’s partnership with IREN is the way it highlights Microsoft’s lead in partner-driven AI expansion. That means rather than relying on its own data centers, Microsoft is using a specialized subcontractor to expand its compute and energy footprint in select areas. This approach could accelerate Microsoft’s time-to-market and help it capture more clients while other companies play catch-up.

MSFT Stock May Have Found a Bottom

Like many technology stocks, MSFT stock is down nearly 10% since the AI sell-off began around Oct. 28. However, it appears that the stock found support at its closing price on Nov. 7 at around $496.

That put the stock right around a level it found in early September and before that in early July. In both cases, MSFT stock rebounded and went on to launch even higher. And in both cases, it hit resistance after reaching a 52-week high.

Will the third time be the time that the stock breaks past this resistance? MSFT stock is trading just below its 50-day simple moving average (SMA), and the Moving Average Convergence Divergence (MACD) line is showing signs of a bullish reversal. That means momentum may be turning in favor of the bulls.

That puts MSFT at a key inflection point. With the MACD turning bullish and the stock pressing against its 50-day SMA, a decisive breakout above $515 could mark the start of a new leg higher.

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