The CapEx Two-Step
It's that time of year again: quarterly earnings for Big Tech. And you know what that means... time for Wall Street to freak out over CapEx spend related to AI build-out once again. Sure enough, Google went first and upped their forecasted spend pushing the range past $200B for the first time. The market puked. Next up, Meta. They simply raised the low-end of their previous guidance (to $130B up from $125B). The market puked.1 Then there's Microsoft...
Wait, what's this? The stock is currently up over 8% in after-hours?! Why? Well I think it's mainly continued impressive Azure growth BUT it's at least in part because unlike with Google's and Meta's relatively strong earnings, that growth isn't negated by yet another resetting of CapEx expectations. In fact, Microsoft is now guiding that their number will come in at $175B for the 2026 calendar year. That's actually $15B below the previous estimate.