Microsoft's $5 Billion Capex Shortfall Tied Partly to IREN Delays, Report Says

Microsoft said last week that its capital expenditure for the quarter came in about $5 billion below its earlier forecast because capacity it planned to rent from a third party was not ready on time. It did not name the provider. Microsoft reported $45.2 billion of capital spending for the quarter.

The report puts a name to one of the delays now affecting the companies that build and rent out GPU capacity to the large cloud groups. These providers have borrowed heavily to build data centres for a small number of customers, so slipping delivery dates can quickly affect both their revenue and their ability to raise money.

IREN's Microsoft deal is a five-year contract worth about $9.7 billion, and the company agreed to buy about $5.8 billion of GPUs and equipment from Dell to serve it. Microsoft accepted the first phase, called Horizon 1, in August, about a quarter later than IREN's management had first indicated. IREN is targeting the next three phases, Horizons 2 to 4, for the December quarter. Its contract includes grace periods that run into early 2027 and delay credits if deliveries slip further.

Financing is also a pressure point. As of August, IREN had about $14 billion in cash, committed GPU financing and customer prepayments, and it was seeking about $8 billion more, according to an analysis by TIKR. It has guided to $25 billion to $30 billion of capital spending in its fiscal year ending June 2027.

Neither IREN nor Microsoft has publicly confirmed that IREN caused the shortfall.

IREN reports results for its fiscal first quarter after the US market closes on Thursday, November 5. Investors will be looking for an update on the remaining Microsoft phases and on progress in closing its funding gap.