Exclusive: Microsoft Lowered Data Center Spending Following Delays By Cloud Firm Iren

Microsoft said last week that it spent about $5 billion less on capital expenditures in the third quarter than it had previously projected because data center capacity it was planning to rent wasn’t ready on time. Microsoft didn’t name the “third party” behind those delays, but one of them is Iren, a publicly traded cloud provider that is already facing pressure as borrowing costs have risen, according to people with knowledge of the situation.

It’s not clear precisely how much of Microsoft’s lower capex for the quarter stemmed from the Iren delay. Microsoft also has contracts to rent capacity from cloud providers including Nscale, Lambda, CoreWeave and Nebius, as Microsoft said it can’t build facilities fast enough on its own.

The episode shows how data center construction delays can cause large swings in payments and revenues, adding to the risks facing younger cloud firms backed by Nvidia, including Iren. In another case, Microsoft last month pulled out of a planned data center it was set to rent from Nscale, another cloud provider, after the U.K. site faced delays accessing the power grid.

A spokesperson for Iren did not immediately comment.

Microsoft announced last year that it planned to spend $9.7 billion over five years to rent servers equipped with Nvidia GPUs at a Texas data center Iren was developing. Iren said the servers would be set up gradually over the course of 2026. But Iren has since faced delays at the Childress, Texas site, leading Microsoft to delay spending it had slated for the September quarter, the people said.