Microsoft cut its full-year capex forecast to $170 billion from $175 billion, while Alphabet held guidance at $195 billion to $205 billion — both below analyst estimates — as GPU delivery delays from third-party providers push some AI infrastructure capacity into 2027.
Microsoft and Alphabet both reported capital expenditures that fell short of Wall Street estimates in their latest earnings releases, raising fresh questions about the pace of the artificial intelligence infrastructure boom that has defined hyperscaler spending for the past several quarters.
Microsoft trimmed its full-year capex forecast to $170 billion from $175 billion, while Alphabet held its guidance steady at $195 billion to $205 billion. Neither company signaled a retreat from AI investment, but the figures landed below what analysts had projected.
Microsoft CFO Amy Hood told analysts on the company's earnings call that third-party providers of graphics processing units had encountered delays that will push some available capacity into the first half of 2027. Hood did not name the affected suppliers, though Microsoft relies on neoclouds including CoreWeave, IREN, and Nebius, among others.
Alphabet's finance chief, Anat Ashkenazi, told analysts that outside computing power "came online only at the very end of Q3," underscoring the timing challenges affecting the broader infrastructure buildout.
Shares of neoclouds CoreWeave, Nebius, and IREN all declined following the reports, as did Oracle, one of the largest spenders on AI infrastructure. Alphabet itself fell approximately 10% in extended trading after missing on both earnings and revenue and reporting negative free cash flow of more than $9 billion.
Not all investors retreated. "We are pleased with what we see and what we heard, and trust management's approach to their AI spending," Chris Ballard, managing director of Check Capital Management, wrote in an email. Meta, which reported last week, said it expects full-year capex of $135 billion to $145 billion, raising the bottom of its range from $130 billion — though Meta shares also fell on negative free cash flow.
Microsoft's results drew a more favorable market response. The company beat earnings and revenue estimates, driven by 48% sales growth in its Azure cloud business. Analysts at Cantor, led by Thomas Blakey, called the quarter "further validation of Microsoft's AI-led growth opportunity" in a Wednesday note to clients, raising their one-year price target on the stock to $630 from $608.
The delivery delays carry added weight given the broader state of the neocloud sector. These companies require billions of dollars in outside capital to sustain their build-outs but lack investment-grade credit ratings. With interest rates rising and lender appetite shrinking, the cost of capital for neoclouds has climbed. Analysts at Gartner told CNBC last week that they predict 80% of neocloud companies will either be absorbed or cease operations entirely by 2030.
Nvidia-backed Australian neocloud Firmus withdrew its plans to go public earlier this month despite holding large usage commitments from Meta and OpenAI. Nscale, which filed to go public in September, has not updated its prospectus in weeks. The strains extend to AI model developers: Anthropic, which counts on infrastructure from Amazon, Google, and Microsoft among others, has seen its Claude assistant go offline at times this year due to climbing demand.
Despite the current friction, Hood said Wednesday that she expects capital spending to accelerate in the first half of 2027, reflecting higher component costs and the delayed deliveries now expected to land then. As a group, hyperscaler capex is projected to exceed $1 trillion next year, with some estimates pointing to further growth beyond that.
Investors will receive another data point when Amazon reports results after Thursday's close, offering a more complete read on third-quarter hyperscaler spending.
Sara Montes de Oca is the Editor in Chief of TechEchelon. Previously a correspondent and producer in Washington, D.C., covering business, finance, and politics.
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