Microsoft has lowered its capital expenditure expectations, which is not common in an industry where most companies are still making substantial investments in AI.
This software giant stated that its capital expenditure for the calendar year 2026 will be $170 billion, which is lower than the previously estimated $175 billion.
Chief Financial Officer Amy Hood made this forecast during the company's earnings call for the first quarter of fiscal year 2026, which was announced on Wednesday.
She stated that Microsoft originally expected third parties to bring in new production capacity, but some of those “GPU i.e., services” contracts have been postponed to the second half of this fiscal year.
This may refer to other AI cloud service providers that use NVIDIA GPU to operate their services. Microsoft has collaborated with some external providers to meet the high demand for AI.
Comments related to Hood may be referring to recent delays in the AI data center project, which were mostly caused by power shortages and local opposition.
The Chief Financial Officer stated that as the delayed production capacity begins to be put into place, Microsoft expects capital expenditures to accelerate in the second half of this fiscal year.
Wall Street is becoming increasingly concerned about the large-scale investments that cloud companies are making to expand their AI infrastructure. It is noteworthy that Microsoft maintained its capital expenditure forecasts unchanged last quarter, whereas many cloud giants have been steadily raising their AI expenditure forecasts.
Overall, Microsoft reported revenue of $92.3 billion for the first quarter of this fiscal year as of September 30, a year-on-year increase of 19%. Azure The cloud business saw a 48% growth in revenue, exceeding $33 billion, which surpassed Wall Street's expectations.
Earlier this week, Microsoft offered buyout options to more than a quarter of its employees. A Microsoft spokesperson told Business Insider on Wednesday that the company expects at most 5% of eligible employees to accept this offer.
Hood wrote in an internal memo seen by Business Insider: "We expect few people to choose this proposal, as there are growth opportunities at Microsoft." Microsoft reported that the total number of employees decreased by 2% this fiscal quarter.
