Microsoft cuts capex forecast on AI capacity delays

Microsoft CEO Satya Nadella. Dimitar DILKOFF / AFP via Getty Images Microsoft lowered its 2026 capex forecast to $170 billion, down from $175 billion. CFO Amy Hood cited delays in third-party capacity as Wall Street scrutinizes returns on AI spending. Azure revenue jumped 48%, beating expectations, while Microsoft's headcount fell 2%. Microsoft reduced its forecast for capital expenditure, a rare move in an industry that mostly continues to splurge more on huge AI investments. The software giant said capex for the 2026 calendar year will be $170 billion from a previous forecast of $175 billion. Chief Financial Officer Amy Hood gave the forecast on the company's fiscal first-quarter earnings call on Wednesday. She said Microsoft was expecting new capacity to arrive from third-parties, but some of these "GPU-as-a-Service contracts" have been delayed until the second half of the fiscal year. This likely refers to other providers of AI cloud services that use Nvidia GPUs to run their offerings. Microsoft has partnered with a some outside providers to meet rampant AI demand. Hood's comments could refer to a recent spate of AI data center project delays, which have mostly been caused by a lack of electricity, along with local opposition. The CFO said Microsoft expects capex to accelerate in the second half of its fiscal year, as the delayed capacity kicks in. Wall Street has become increasingly concerned the huge investments cloud companies are making to expand AI infrastructure. Microsoft last quarter kept its forecast unchanged, notable as many cloud giants have been steadily increasing their AI spending forecasts. Overall, Microsoft reported $92.3 billion in revenue, up 19%, for the fiscal first-quarter ending Sept. 30. Azure cloud revenue was up 48% to more than $33 billion, surpassing Wall Street expectations. Microsoft share were up about about 3% in after-hours trading following the earnings call. Earlier this week, Microsoft offered a buyout to more than a quarter of its workforce. A Microsoft spokesperson told Business Insider on Wednesday that the company expects 5% of eligible employees at most to accept the buyout. "We expect very few people to select this offer because of the growth opportunities here at Microsoft," Hood wrote in an internal memo viewed by Business Insider. Microsoft's headcount slipped 2% during the fiscal first quarter, the company reported. Have a tip? Contact this reporter via email at astewart@businessinsider.com or Signal at +1-425-344-8242. Use a personal email address and a non-work device; here's our guide to sharing information securely. Read the original article on Business Insider