Microsoft and Alphabet Lower Capex Forecasts Amid AI Infrastructure Supply Constraints
Microsoft and Alphabet have reported capital expenditure figures that fell short of analyst expectations, signaling potential friction in the massive AI infrastructure build-out. Microsoft reduced its annual capex forecast to $170 billion from a previous $175 billion, while Alphabet maintained guidance between $195 billion and $205 billion but faced market backlash following an earnings miss and negative free cash flow of over $9 billion. The slowdown is attributed in part to supply chain issues; Microsoft CFO Amy Hood noted that delays from third-party GPU providers could push available capacity out until the first half of 2027. These disclosures have triggered volatility across the sector, specifically impacting 'neocloud' providers like CoreWeave and Nebius, as well as major infrastructure spenders like Oracle. Investors remain wary of the rising cost of capital for these specialized cloud providers which lack investment-grade credit ratings.
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Topics: AI Infrastructure Capital Expenditures Cloud Computing Semiconductor Supply Chain
Part of the story Microsoft and Alphabet Earnings Reveal Divergent Paths Amid AI Infrastructure Spending (8 articles)