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Microsoft and Alphabet reported last quarter capital expenditures that fell short of analyst targets.
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“Some third-party capacity deliveries we expected in Q1 were delayed,” Microsoft CFO Amy Hood said.
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Bank of America disclosed that it held a 4.1% stake in IREN.
Neocloud stocks fell in overnight trading late Wednesday after Microsoft Corp. (MSFT) reported fiscal Q1 capital expenditure below analysts’ and its own estimates, citing a delay in certain third-party cloud capacity coming online under contract.
Together with Alphabet (GOOGL) also reporting a lower-than-expected CapEx figure in Q3, investors took that as a sign of a slower ramp-up in capacity at neocloud firms.
CoreWeave (CRWV) stock fell 5.8%, while Nebius (NBIS) stock declined 6.3%. Iren Ltd (IREN) and Applied Digital (APLD) declined 5.3% and 4.3% respectively. The moves cast brakes on a rebound this week, after a sharp selloff recently over fears around the sustainability of neocloud business models.
Microsoft on Wednesday reported $45.2 billion in CapEx and finance leases during the last quarter, up about 30% from a year earlier, but below the $50.7 billion estimate cited by StreetAccount in a CNBC report. It was also below Microsoft’s own target of around $50 billion.
“Capital expenditures were $45.2 billion as some third-party capacity deliveries we expected in Q1 were delayed, CFO Amy Hood said in the analyst call. “In Q2, we expect CapEx spend will be over $50 billion. Therefore, for the calendar year, spend should be approximately $170 billion due to the 3P capacity delays noted earlier.”
Microsoft, which runs the Azure cloud computing platform, relies on third-party cloud providers to meet demand beyond its capacity. The company inked a deal with Nebius last year, reportedly worth up to $19.4 billion, for compute through the 2030s and is also a major customer for CoreWeave.
Separately, Alphabet reported $51.36 billion in capital expenditure, while analysts expected $55.09 billion.
IREN In Focus
In the neocloud group, Iren was in focus. The Sydney, Australia-headquartered firm on Wednesday said it had raised $363 million by refinancing recently purchased AI computing equipment.
The deal was financed by a syndicate of six lenders, anchored by large commitments from Eldridge Capital Management and Silver Point Capital – and is notable given the pressure for neoclouds to raise funding from debt markets recently.
