Microsoft (MSFT) just locked in electricity for an Indiana data-center campus two years before the power arrives. On Friday, NiSource (NI) announced a 20-year energy agreement with Microsoft that starts in 2028 and adds about 1,100 MW to NiSource’s generation pool. Microsoft pays for all the generation and transmission needed to serve the site.
A Quarter’s Worth of Capacity in One Contract
That 1,100 MW is roughly what Microsoft now brings online in a full quarter. On the company’s July 29 earnings call, CEO Satya Nadella said Microsoft added “another gigawatt of capacity” in the June quarter and is on track to roughly double its total capacity in two years. CFO Amy Hood added that customer demand still exceeds available supply.
Microsoft’s Spending Has Outrun the Grid
Microsoft’s cash capital expenditure grew from $23.9 billion in fiscal 2022 to $116 billion in fiscal 2026, almost five times as much. Fiscal 2026 alone was up about 80%.
About two-thirds of last quarter’s roughly $41 billion in capex, including finance leases, went to short-lived assets, mainly CPUs and GPUs. Those servers earn nothing until a site has power, and new generation takes years to build. Management expects that broader measure to grow again in fiscal 2027, starting with more than $50 billion in the September quarter.
Conclusion
On its own, this contract won’t move Microsoft’s numbers. What it shows is the order things now happen in: power first, then chips, then Azure revenue. Microsoft is also joining a queue. NiSource signed Alphabet (GOOGL) and expanded its Amazon (AMZN) agreement in April, so three hyperscalers now have power agreements with the same Indiana utility. NiSource has promised more financial detail on the Microsoft deal on its October 28 earnings call.
Microsoft’s capex chart tells most of this story on its own. You can pull up the same spending history, plus analysts’ forecasts for where it goes next, on TIKR for free. Learn more here.
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