Microsoft Lowers 2026 Capital Expenditure to $170 Billion Due to Delayed GPU Contracts
Microsoft has lowered its 2026 capital expenditure forecast by $5 billion to $170 billion because several third-party GPU computing power contracts have been delayed to the second half of fiscal 2027. Meanwhile, the company reported strong financial results with Azure cloud revenue surging 48% to surpass $33 billion. This rare reduction in AI infrastructure spending highlights how hardware supply chain bottlenecks can temporarily alter hyper-scalers' aggressive financial projections. It provides a unique counter-narrative to the prevailing industry trend of continuously escalating AI investments. Microsoft's capital expenditures are expected to accelerate in the second half of the fiscal year as the delayed computing power is finally delivered. Concurrently, the company's total revenue for the first quarter of fiscal 2027 reached $92.3 billion, representing a 19% year-over-year increase.
## BACKGROUND
AI capital expenditure refers to the massive investments made by tech giants into building data centers, acquiring chips like Nvidia GPUs, and purchasing power-matching hardware to support artificial intelligence workloads. Azure is Microsoft's flagship cloud computing platform that provides scalable computing resources, virtual machines, and managed services to enterprises globally.