tech
Microsoft keeps capex forecast unchanged, becoming one of the first data center giants to hold the line on AI spending
Most tech giants have been raising their AI capex forecasts. Microsoft is an outlier.
TL;DR
- Microsoft maintained its capital expenditure (capex) forecast, unlike other major data center companies.
- The company's stock rose approximately 8% on the news.
- Earlier this year, Microsoft planned to spend $190 billion on capex; this guidance is now $175 billion due to an accounting change, but AI capex plans remain the same.
- Most cloud giants have been increasing their AI spending forecasts to capture market share.
- Investors are concerned about the returns on these large investments.
- Competitors like Alphabet and Tesla increased their capex projections, while Meta narrowed its range with an increased midpoint.
- The significant spending by tech giants is driving up memory chip prices, a major component of data center costs.
- Rising AI capex forecasts may be partly due to higher memory costs rather than solely new capacity plans.