IREN is set to release its earnings this week and is currently grappling with operational pressure from rising borrowing costs. Last week, Microsoft disclosed that its third-quarter capital expenditure came in roughly $5 billion below prior expectations, citing delays in the delivery of leased data center compute capacity.

Microsoft did not identify the "third-party vendor" responsible for the delays, but people familiar with the matter said that publicly listed cloud service provider IREN is one of them. IREN itself is currently facing operational strain from escalating borrowing costs.

It remains unclear what proportion of Microsoft's reduced capital spending this quarter can be directly attributed to IREN's project delays. Because Microsoft's own compute facility buildout cannot keep pace with business demand, it has also signed compute leasing agreements with multiple cloud providers including Nscale, Lambda, CoreWeave, and Nebius.

This episode illustrates that data center construction delays can cause significant fluctuations in corporate payments and revenue, further heightening operational risks for emerging cloud providers like IREN that have received investment from Nvidia. A similar case occurred last month when Microsoft abandoned a lease for cloud provider Nscale's data center project in the UK, also due to construction delays. An IREN spokesperson declined to comment.

Microsoft announced last year a plan to invest $9.7 billion over the next five years to lease servers equipped with Nvidia GPUs from IREN's data center in Texas. IREN said at the time that these servers would be deployed in phases throughout 2026. But people familiar with the matter said the project in Childress, Texas, subsequently experienced construction delays, directly causing Microsoft to postpone related spending originally planned for the September quarter.

A Microsoft spokesperson said in a statement: "Our infrastructure strategy is centered on flexibility and optionality, combining Microsoft's own data centers, leased sites, and strategic partnerships with third-party providers to bring compute resources online reliably and efficiently."