IREN, a cloud service provider backed by NVIDIA, said on Thursday that Microsoft's request to modify networking equipment has caused delays in its large data center project in Childress, Texas.
IREN said the company now expects to achieve $4 billion in annualized recurring revenue in January or February next year, a delay from its previous year-end target.
The project is divided into four phases, and IREN is advancing construction under a $9.7 billion contract with Microsoft. During the earnings call on Thursday, IREN co-CEO Daniel Roberts said that after the first building was delivered in August, Microsoft requested relatively low-cost adjustments to the project to help support its latest AI models.
He said, "The data center is nearly complete, and we are waiting for the remaining equipment to arrive to finish the commissioning."
He also said that IREN has a good relationship with Microsoft.
Last week, Microsoft stated that due to delays from third-party cloud providers, the company spent $5 billion less than expected on AI infrastructure. Although Microsoft did not name any specific providers, satellite imagery analyzed by research firm Aterio points to IREN and Nebius.
This delay highlights growing market concerns about neoclouds—companies that rent AI computing power to enterprises, which have recently faced power shortages and construction setbacks.
Roberts said that, despite continued strong customer demand, IREN is slowing its expansion plans due to tighter financing conditions.
Neoclouds like IREN are an important part of NVIDIA’s customer base, many of which NVIDIA has supported through investments and financial guarantees.
This also enables NVIDIA to reach a broader customer base beyond cloud giants like Google, Amazon, and Microsoft—companies that both purchase NVIDIA chips and develop their own competing hardware.