Data center stocks decline as Microsoft spending delays impact IREN

The Childress, Texas campus is a key part of IREN’s transition from cryptocurrency mining to AI cloud services. The company completed Horizon 1, the first of four 50-megawatt liquid-cooled deployments for Microsoft, in August. IREN aims to achieve $4 billion in contracted annualized recurring revenue by December 31, as stated in its Q4 FY2026 results released August 27.

The report, citing anonymous sources, indicated that delays at the Childress site contributed to Microsoft postponing capital expenditures planned for the September quarter. Microsoft’s overall capex fell short by $5 billion, according to The Information. During Microsoft’s earnings call last week, CFO Amy Hood stated, “Capital expenditures were $45.2 billion as some third-party capacity deliveries we expected in Q1 were delayed.” Microsoft’s contract with IREN involves spending $9.7 billion leasing GPU servers at Childress, The Information reported.

Other data center stocks also experienced significant drops. Nebius Group (NASDAQ:NBIS) fell 11% to $125.88, while CoreWeave (NASDAQ:CRWV) slid 7% to $44.89. Cipher Digital (NASDAQ:CIFR) also traded lower.

The election outcome is adding to the sector’s concerns. The defeat of Texas Governor Greg Abbott by Democrat Gina Hinojosa, who supports a moratorium on data centers in Texas, has raised anxieties for IREN’s Texas sites. While a complete halt to operations is unlikely, lawmakers could potentially lengthen and increase the cost of approval processes.

IREN operates as a vertically integrated owner-operator, controlling its land, grid connections, buildings, and GPU fleet, with Microsoft as its primary customer. This structure provides access to cheaper financing but also concentrates risk. Nebius offers a full-stack AI cloud with its own software layer, while CoreWeave provides a GPU cloud for hyperscalers and enterprises. Cipher Digital rents powered buildings, leaving GPU spending to its tenants.

IREN is scheduled to release its Q1 FY2027 results on November 5. Analysts anticipate sales of $221.7 million and an adjusted loss of $0.67 per share. Investors will be closely monitoring whether management confirms the timeline for Horizons 2 through 4. Co-CEO Daniel Roberts previously stated on August 27, “Our 2026 capacity is largely sold out.” The company has secured $14 billion in committed financing and prepayments. However, IREN has also cautioned that much of the December capacity will come online late in the quarter, shifting revenue to March, and potential Texas regulations could hinder future expansion. Upcoming economic data, including weekly jobless claims and the October payrolls report, will also be watched closely.