Microsoft holds $190B capex plan, breaking rivals' AI spending pattern

Microsoft kept its capital expenditure forecast unchanged on Wednesday, one of the first cloud giants to hold the line on AI spending this earnings season.

The company confirmed its plan to spend $190 billion on capex this calendar year. An accounting change makes the guidance appear as $175 billion in the earnings release, but the underlying spending plan is unchanged.

The move stands out. Most cloud rivals have been ratcheting up their AI spending forecasts. Alphabet raised its projection by $15 billion. Tesla bumped up its own. Both stocks fell sharply last week as investors punished the higher spending plans. Meta narrowed its capex range Wednesday, raising the midpoint by $2.5 billion for the year.

Investors have grown uneasy about the returns on these investments. Some on Wall Street questioned whether tech giants would blink during this earnings season. Microsoft, at least, is not joining the escalation.

Even before the latest increases, Google, Amazon, Microsoft, and Meta had laid out plans to spend more than $700 billion this year, mostly on AI data centers.

That spending binge has sent memory-chip prices soaring. Memory is a major piece of data center costs, and rising prices have made it more expensive to build AI capacity. Earlier research found that higher memory costs could explain about 45% of the growth in capex by the big cloud companies this year.

Microsoft's steady capex forecast means the same dollar amount buys less hardware than it did last year. In real terms, the company may be pulling back slightly on new capacity.

Microsoft shares closed at $390.54, down 0.71%. The stock carries an Alpha Score of 61 out of 100, a moderate rating. For more on Microsoft's valuation and positioning, see the MSFT stock page.