Microsoft Trims Capex Outlook to $170B on GPU Delays as Alphabet Holds, Hitting Neocloud Stocks

Microsoft (MSFT) lowered its capital spending forecast to $170 billion from $175 billion, citing delays in third-party GPU deliveries, while Alphabet (GOOGL) kept its $195 billion to $205 billion outlook. Both reported capital expenditures below estimates as delays in delivering AI infrastructure complicate expansion despite strong demand. The news weighed on neocloud and AI infrastructure names, including CoreWeave (CRWV), Nebius (NBIS), IREN (IREN) and Oracle (ORCL).

The capex outlooks

Microsoft's revised figure is a $5 billion reduction, or about 2.9% by our calculation. The company described it as a timing issue: third-party GPU delivery delays are pushing capacity into the first half of calendar 2027, when spending is expected to accelerate. Microsoft's fiscal year ends in June, so the $170 billion appears to refer to fiscal 2027 and not calendar 2026 as some summaries say. According to a summary of the call, Microsoft spent $45.2 billion in the quarter including finance leases ($39.37 billion excluding them) against its own projection of about $50 billion. Read our Microsoft earnings coverage for the full quarter, including Azure growth of 48%.

Alphabet: capacity arrived late

Alphabet kept its 2026 forecast of $195 billion to $205 billion and said capital spending will increase significantly in 2027. Third-quarter capital expenditures were $51.36 billion. Alphabet said external computing capacity arrived only at the end of the third quarter; a summary of its call says that capacity comes online in the fourth quarter and will create near-term Cloud margin headwinds from higher depreciation and data-center operating costs. Alphabet also reported negative free cash flow of about $9 billion, as covered in our Alphabet earnings article.

Neoclouds under pressure

CoreWeave, Nebius, IREN and Oracle shares declined amid financing concerns. Rising borrowing costs and heavy debt are pressuring providers that depend on hyperscaler demand and on financing to buy GPUs. Gartner has warned that most neoclouds may not survive independently, with as many as 80% potentially acquired or ceasing operations by 2030. Nvidia-backed Firmus recently abandoned its IPO.

Demand is not the issue

Anthropic relies on infrastructure from Amazon, Google, Microsoft, SpaceX, Lambda and Nscale, while OpenAI is also seeking additional capacity. Combined hyperscaler capital spending is expected to exceed $1 trillion in 2027. Meta narrowed its 2026 capex range to $135 billion to $145 billion, which raises the bottom end to $135 billion, and Amazon is scheduled to report on Thursday.

What it means

The lower Microsoft number reflects when equipment arrives, not a drop in demand. Azure grew 48% and management guided to faster growth next quarter, so the delays shift spending later in time instead of reducing it. For neoclouds, the combination of delayed capacity and tight financing is the pressure point: they carry the debt for GPUs while customers wait for the capacity to come online. Amazon's results and capex commentary on Thursday are the next test for the spending outlook.

Sources: Company earnings reports and calls from Microsoft and Alphabet (Oct. 28). This is informational, not a recommendation to buy or sell.