(Reuters) -Microsoft has struck a $9.7 billion deal with data-center operator IREN that includes access to Nvidia's advanced chips, aiming to ease the computing crunch that has kept the tech giant from fully cashing in on the artificial intelligence boom.

The news sent shares of IREN up as much as 24.7% to a record high on Monday, with the stock last up nearly 10%. AI-server maker Dell was also up about 1%, as it would provide IREN with Nvidia's GB300 chips and other equipment that Microsoft will use for about $5.8 billion.

The five-year Microsoft deal shows the AI industry's growing hunger for computing power to run applications such as ChatGPT. It follows earnings from major tech companies last week that underscored capacity shortages were limiting their ability to fully benefit from the boom.

Partnering with IREN would allow Microsoft to expand computing capacity without building new data centers or securing additional power - two of the biggest hurdles slowing its ability to meet surging AI demand.

It will also sidestep heavy capital spending on chips that will lose value as newer, more powerful processors arrive.

Such demand has propelled so called "neocloud" companies such as CoreWeave and Nebius Group - which sell cloud computing services built on Nvidia's processors - ahead in the AI race. Microsoft recently also signed a deal worth $17.4 billion with Nebius for infrastructure capacity.

IREN, which had a market value of $16.52 billion as of last close after a more than six-fold surge in its shares this year, has multiple data centers across North America with a total capacity of 2,910 megawatts.

The company said the Nvidia processors are scheduled for phased deployment through 2026 at its 750-megawatt Childress, Texas, campus, alongside new liquid-cooled data centers designed to deliver about 200 megawatts of critical IT capacity.

Cash from Microsoft's prepayment will help finance part of its $5.8 billion Dell deal, IREN said. Its Microsoft contract could be terminated if it fails to meet the delivery timelines.

Separately on Monday, AI cloud startup Lambda said it has signed a multibillion-dollar agreement with Microsoft to deploy AI infrastructure powered by Nvidia.

(Reporting by Deborah Sophia and Aditya Soni in Bengaluru; Editing by Arun Koyyur and Shinjini Ganguli)