Microsoft's capital expenses are “broken”! “Computing power landlords” collectively fell in stock prices after the market

The Zhitong Finance App learned that Microsoft (NASDAQ: MSFT) released its latest quarterly report on Wednesday EST. Although the revenue of the cloud computing business Azure surged 48% year over year, its capital expenditure data fell short of market expectations, causing the market to worry that cloud computing power leasing (CRWV.US) and Nebius (NBIS.US) data center capacity delivery progress, which are partners in computing power infrastructure, may slow down. After the news was announced, related companies' stock prices fell collectively during after-hours trading.

Capital expenditure falls short of expectations, and “computing power landlords” stock prices are under pressure

According to financial reports, Microsoft's total capital expenditure and financial leases reached 45.2 billion US dollars this quarter, an increase of about 30% over the previous year, but it is lower than the average analysts' forecast of 50.7 billion US dollars according to StreetAccount statistics. The market believes that this gap indicates that Microsoft's computing power infrastructure partners take longer to deliver data center capacity.

Microsoft continues to invest heavily in artificial intelligence infrastructure, and its dependence on cloud computing power leasing companies is particularly prominent: at the end of last year, Microsoft and Nebius signed a computing power cooperation agreement of nearly 20 billion US dollars, extending the cooperation period to the 2030s; at the same time, Microsoft is also one of CoreWeave's major customers.

After the earnings report was released, CoreWeave and Nebius shares both fell by nearly 5% after the market, and IREN fell by about 3%. Oracle, which surged 11% during the current regular trading period due to strong long-term revenue guidance, also took back some of its gains after the release of Microsoft's earnings report and closed down 3%.

Notably, Azure revenue grew 48% year over year, far outpacing capital expenditure growth. Microsoft explained in the earnings presentation: “The increase in revenue was higher than capital expenditure due to the difference in timing between receipt and payment, as well as the decline in the share of financial leases.”

The shadow of bond market tightening looms over, and expectations for industry consolidation are heating up

The recent market performance of Xinyun's Neocloud sector has been volatile. As interest rates rise, the market is concerned that future bond issuance and financing costs will be too high, lenders may withdraw, and the stock prices of many related companies have fluctuated greatly in recent weeks.

Notably, pessimistic expectations in the industry are also intensifying. Recently, SpaceX CEO Elon Musk posted a post on social networking platform X last weekend predicting that more than 200 cloud computing power lessors will fall, and stated that “for any company with no substantial revenue independent of AI data centers, the bond market has almost completely closed the financing channel.” Musk's SpaceX currently leases AI infrastructure to Anthropic and Google.

On Monday, analysts at research firm Gartner told CNBC that it is expected that 80% of cloud computing power leasers will be acquired, integrated or completely cease operations by 2030.

The short-term rebound has come to an end, and industry differentiation has intensified

After experiencing a deep pullback this month, the NeoCloud sector experienced a moderate rebound this week — CoreWeave had a cumulative increase of 18% over the past three trading days, leading the sector. Analysts at Wolfe Research predicted in a Tuesday report that the stock is expected to rebound to the mid-$75 range. However, as of Wednesday's close, CoreWeave reported $63.93. The post-market decline after the release of Microsoft's earnings report hampered the current round of rebound.

The strong long-term revenue forecast released by Oracle early Wednesday once injected confidence into the infrastructure industry narrative — the company said it would return to positive free cash flow in the second half of next fiscal year. However, market sentiment quickly changed as both Microsoft and Alphabet handed over lower-than-expected capital expenditure data.

Alphabet (Google's parent company), which also released its earnings report on Wednesday, had a capital expenditure of US$51.36 billion, which is also lower than market expectations of US$55.09 billion. The spending data of the two major cloud giants is compounded by Musk and Gartner's pessimistic predictions, and the risk of financing and integration in the cloud computing infrastructure industry is becoming the focus of market attention.