Microsoft reported fiscal first-quarter revenue of $92.28 billion and Azure cloud growth of 48% year over year, but capital expenditures of $45.2 billion — well below the $50.7 billion analyst estimate — sent neocloud stocks CoreWeave and Nebius down nearly 5% in after-hours trading.
Microsoft posted stronger-than-expected fiscal first-quarter results Wednesday, with Azure cloud revenue climbing 48% year over year to $33.17 billion — but a capital expenditure figure that came in well below analyst forecasts sent shares of infrastructure partners CoreWeave and Nebius sharply lower in after-hours trading.
Total revenue for the three months ended in September rose approximately 19% year over year to $92.28 billion, beating the LSEG consensus estimate of $90.69 billion. Adjusted earnings per share reached $4.92, up 32% from a year earlier and ahead of the $4.73 consensus, according to LSEG.
Azure's 48% growth rate exceeded both FactSet consensus estimates of roughly 44% to 45% and management's own guidance of approximately 45%, underscoring continued enterprise appetite for cloud and AI-linked compute.
Capital expenditures, including finance leases, totaled $45.2 billion for the quarter — up about 30% from a year earlier but below the $50.7 billion average analyst estimate, according to StreetAccount, and also short of management's own projected $50 billion. Microsoft attributed part of the gap to third-party capacity delays and a lower mix of finance leases.
"Growth was higher than capital expenditures driven by timing differences between receipt of goods and payment and a lower mix of finance leases," the company said in its earnings deck.
The lower capex figure weighed immediately on neocloud stocks. CoreWeave and Nebius each fell almost 5% in extended trading, while IREN dropped about 3%. Microsoft had inked a nearly $20 billion deal with Nebius for compute capacity through the 2030s and is also a top customer for CoreWeave, making both companies sensitive to any signals about the pace of Microsoft's infrastructure buildout.
The neocloud sector had already experienced a turbulent October. Rising interest rates sparked concern that future debt raises would become prohibitively expensive, and Elon Musk posted on X over the weekend that "debt markets have almost entirely shut off access to money for any company that doesn't have substantial revenue independent of AI data centers." Analysts at Gartner separately shared a prediction that, by 2030, 80% of neocloud companies will either be absorbed or cease operations entirely.
Before Microsoft's report, the group had staged a partial recovery, with CoreWeave gaining 18% over the prior three trading days. Analysts at Wolfe Research wrote Tuesday that they expected the stock to rebound into the mid-$70s; it closed Wednesday at $63.93.
Despite the capex shortfall, Microsoft said its spending discipline reflects a deliberate strategy. The company added 24 new data centers across five continents during the quarter. CEO Satya Nadella noted on the earnings call that Copilot's daily users increased 50% year over year, while user satisfaction improved by nearly 20% quarter over quarter to an all-time high. Capital expenditures came in substantially below the $51 billion analysts had forecast, and the company returned $2.9 billion to shareholders through share repurchases.
CFO Amy Hood acknowledged that the company "will access additional sources of funding when we believe it is attractive to do so," a signal analysts will monitor given that peers Alphabet and Meta have issued equity to fund AI investment.
Looking ahead, Microsoft guided Azure revenue growth of approximately 49% to 50% in constant currency for the current quarter, ahead of the roughly 46% analysts had anticipated, according to FactSet. Total revenue guidance for the Agents and Infra segment came in at $80.1 billion to $80.7 billion, above the FactSet consensus of $79.6 billion.
Alphabet also reported capital expenditure figures that fell short of expectations Wednesday, with the Google parent posting $51.36 billion against an analyst estimate of $55.09 billion — a parallel data point that reinforced the day's pressure on infrastructure-dependent neocloud operators.
TechEchelon Staff bylines are produced collectively by the newsroom for short, breaking, and wire-style coverage. Longer-form reporting is published under the responsible reporter's name.
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