Microsoft is reportedly in advanced talks to lease data center capacity at the Stargate Project site in Abilene, Texas — the same site where Oracle and OpenAI recently pulled back on expansion plans.
The site spans 1,000 acres and is being developed by Crusoe, a company that builds data centers using renewable energy and stranded natural gas. Construction is ongoing.
Oracle currently leases eight buildings at the location for use by OpenAI. The original plan called for the site to grow from 1.2 GW to 2 GW, but that expansion was shelved.
Microsoft is now reportedly looking to fill that gap. According to The Information, talks are at an advanced stage and involve hundreds of megawatts of capacity.
The news places Microsoft alongside Meta, which was reported last week as also wanting to lease space at the same site. Both companies appear to be moving quickly to secure AI infrastructure.
Microsoft could use the leased capacity to expand its Azure cloud platform. It could also use it to supply cloud servers directly to OpenAI, which it has a close investment relationship with.
Completing the full site build-out is expected to require tens of billions of dollars, including Nvidia GPUs needed to power AI workloads.
Microsoft’s Azure cloud segment has been a core growth driver for the company. Leasing capacity at an existing, partially-built site could be a faster route to expansion than breaking ground elsewhere.
Microsoft reported trailing twelve-month revenue of $305.45 billion, with revenue growth of 12.8% over the past three years.
Its operating margin sits at 46.67% and net margin at 39.04%. The company carries a debt-to-equity ratio of 0.15, which points to a conservative balance sheet.
The stock’s P/E ratio is currently 25.29, near its five-year low. The P/S ratio of 9.89 is close to its three-year low, and the P/B ratio of 7.69 is also near multi-year lows.
Analyst consensus has a target price of $596.93 on MSFT with a “Buy” rating. The RSI sits at 45.27, suggesting the stock is in neutral territory.
The Stargate Project is one of the flagship AI infrastructure initiatives in the U.S. Microsoft’s reported interest in leasing capacity there adds another layer to its ongoing AI buildout strategy.
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