Microsoft guides to roughly $190bn 2026 capital expenditure amid AI buildout

Reporting fiscal third-quarter results, Microsoft told investors it now expected roughly $190 billion in capital expenditure for 2026, a figure that came in about $35 billion above analyst consensus of around $155 billion. The company said roughly $25 billion of the increase was attributable not to added data-centre capacity but to component price inflation, chiefly memory and storage, which it said had in some cases more than tripled in price since the previous autumn as AI infrastructure demand strained supply.

The quarter’s headline numbers were strong by conventional measures: revenue of $82.9 billion and adjusted earnings per share of $4.27, both ahead of forecasts, with cloud revenue up 29% to $54.5 billion. Quarterly capital expenditure and finance leases reached $31.9 billion, up 49% year on year, and gross margin narrowed to 67.6%, its lowest since 2022, as depreciation on the data-centre build-out mounted. Microsoft said it expected to remain capacity-constrained at least through the rest of 2026.

The guidance sharpened a question already following the sector: whether AI infrastructure spending was outrunning the revenue it produced. Coverage noted that across the preceding four quarters Microsoft had spent roughly $97 billion on infrastructure against about $37 billion in annualised AI-services revenue, a gap Wall Street was watching closely as memory shortages, driven by the same AI boom straining Microsoft’s own budget, pushed component costs higher across the industry.