Microsoft Cuts 2026 Capex to $170 Billion, Azure Grows 48%

The group has revised its investment forecast for 2026 to $170 billion, citing capacity delays with partners. This shift comes as the quarter ending in September shows $92.3 billion in revenue and a 48% increase for Azure.

Stock rises 3% and a layoff plan targets over a quarter of employees

Microsoft's stock rose by about 3% in after-hours trading following the earnings call. Earlier in the week, the company proposed a voluntary layoff plan to over a quarter of its workforce. A spokesperson indicated that Microsoft expects a maximum of 5% of eligible employees to accept the offer. Amy Hood, in an internal memo, stated that she anticipates very few acceptances. For the quarter, the workforce decreased by 2%.

2026 Capex revised down to $170 billion amid third-party delays

Microsoft has lowered its capital expenditure projection for 2026, now set at $170 billion instead of the previously announced $175 billion. Amy Hood attributed this change to capacity delays encountered with external suppliers and shared this during the first fiscal quarter earnings presentation on Wednesday. She specified that GPU-as-a-Service contracts are being pushed to the second half of the fiscal year, while anticipating an acceleration in capital investments once these capacities come online. In a context where Wall Street players are scrutinizing returns on AI spending, Microsoft had maintained its outlook unchanged in the previous quarter.

Strong quarter: $92.3 billion in revenue, Azure surpasses $33 billion

For the first fiscal quarter ending September 30, Microsoft reported $92.3 billion in revenue, up 19%. Azure grew by 48% and exceeded expectations, totaling over $33 billion. To meet AI demand, the company has established partnerships with external suppliers.