Major tech infrastructure partners faced immediate market pressure after Microsoft's quarterly capital expenditures and finance leases totaled $45.2 billion, missing the $50.7 billion consensus estimate. The shortfall suggests a slowdown in hardware deliveries, even as Microsoft's Azure division grew 48% year-over-year. Alphabet similarly reported capital expenditures that missed analyst projections, compounding sector-wide concerns. In extended trading, shares of Nebius and CoreWeave tumbled nearly 5%, while IREN dropped roughly 3%.
Key points
Microsoft remains a primary compute buyer for alternative cloud providers, having recentl…: Microsoft remains a primary compute buyer for alternative cloud providers, having recently secured a nearly $20 billion deal with Nebius.
Market analysts at Gartner predict that 80% of neocloud firms will be acquired or close d…: Market analysts at Gartner predict that 80% of neocloud firms will be acquired or close down by 2030.
Neocloud operators confront severe financing hurdles as higher interest rates strain debt…: Neocloud operators confront severe financing hurdles as higher interest rates strain debt-funded business models.
Sources checked by our analysis pipeline: 1
Shares of neoclouds like CoreWeave and Nebius dropped in extended trading as Microsoft's lower-than-expected capital expenditures figure points to infrastructure partners taking longer to deliver data center capacity.
Microsoft on Wednesday reported $45.2 billion worth of capex and finance leases during the quarter, up about 30% from a year earlier, but below the $50.7 billion average analyst estimate, according to StreetAccount.
Microsoft is particularly reliant on neoclouds for capacity as it pours money into its artificial intelligence infrastructure. Microsoft inked a nearly $20 billion deal with Nebius at the tail end of last year for compute through the 2030s. It's also a top customer for CoreWeave.
Those companies and their peers have experienced a rocky few weeks on the market as rising interest rates led to concerns that future debt raises will be too expensive and lenders will start retreating.
In its earnings report, Microsoft said Azure revenue jumped 48% from a year earlier, far outpacing the increase in capex.
"Growth was higher than capital expenditures driven by timing differences between receipt of goods and payment and a lower mix…
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