The Capex Miss Was a Delivery Date, in a Bite

Microsoft doubled its cash spending on data centers against last year and still missed the capex number the market was watching.

• Cash additions to property and equipment reached $39.4 billion, up from $19.4 billion a year earlier.
• Total capex including finance leases was $45.2 billion against a $50.7 billion consensus, and full year guidance came down to $170 billion from $175 billion.
• The company pointed at delayed deliveries from third party GPU providers, which pushes some capacity into the first half of 2027.
• Azure still grew 48 percent to $33.2 billion and the commercial backlog rose 73 percent to $677 billion, so demand was never the problem.
• The finance chief also expects component costs to rise, which means capital spending accelerates once the delayed gear lands.

The neoclouds that supply that third party capacity fell on the news. They borrow to buy GPUs, they carry no investment grade rating, and that is the part of the chain money markets are now pricing. Read the full analysis.