Microsoft Announces Increased Capex Plans for Fiscal 2027, Boosting Outlook for Nvidia
Microsoft announced plans to increase its capital expenditures (capex) for fiscal 2027 due to strong demand signals across its portfolio. This decision suggests the company is not yet meeting computing power needs and indicates ongoing growth in data center spending driven by artificial intelligence initiatives. The move supports Nvidia's projection that AI hyperscalers will spend over $1 trillion on data centers in 2027, up from an estimated $650 billion this year. Despite these positive signals for the chipmaker, the market has not yet reflected optimism into its stock valuation, which currently trades at a forward P/E of 21.1 — equal to that of the S&P 500. Analysts still expect significant revenue growth from Nvidia in fiscal 2028, with Wall Street projecting an increase of over 42%. The next major catalyst for investor sentiment is expected when Nvidia reports its second-quarter earnings on August 26.
Topics: AI capex growth data centers hyperscalers