Shares of neoclouds like CoreWeave and Nebius dropped in extended trading as Microsoft's lower-than-expected capital expenditures figure points to infrastructure partners taking longer to deliver data center capacity.
Microsoft on Wednesday reported $45.2 billion worth of capex and finance leases during the quarter, up about 30% from a year earlier, but below the $50.7 billion average analyst estimate, according to StreetAccount.
Microsoft is particularly reliant on neoclouds for capacity as it pours money into its artificial intelligence infrastructure. Microsoft inked a nearly $20 billion deal with Nebius at the tail end of last year for compute through the 2030s. It's also a top customer for CoreWeave.
Those companies and their peers have experienced a rocky few weeks on the market as rising interest rates led to concerns that future debt raises will be too expensive and lenders will start retreating.
In its earnings report, Microsoft said Azure revenue jumped 48% from a year earlier, far outpacing the increase in capex.
"Growth was higher than capital expenditures driven by timing differences between receipt of goods and payment and a lower mix of finance leases," Microsoft said its earnings deck.
CoreWeave and Nebius slid almost 5% after Microsoft's report. IREN fell about 3%.
Alphabet on Wednesday also reported capex numbers that fell short of estimates. The Google parent's capex totaled $51.36 billion, while analysts expected $55.09 billion.
SpaceX CEO Elon Musk , whose company rents AI infrastructure to Anthropic and Google , predicted over the weekend that more than 200 neocloud companies will collapse, posting on X that "debt markets have almost entirely shut off access to money for any company that doesn't have substantial revenue independent of AI data centers."
And last Monday, analysts at Gartner shared with CNBC its prediction that, by 2030, 80% of neocloud companies will either be absorbed or completely cease operations.
After a steep plunge this month, the neoclouds had been enjoying a modest recovery this week, with CoreWeave up 18% in the past three trading days to pace the gains. Analysts at Wolfe Research wrote in a report on Tuesday that they see the stock rebounding into the mid-$70s. It closed Wednesday at $63.93.
The infrastructure story gained some strength earlier on Wednesday as Oracle issued a strong long-term revenue forecast and said it will return to being free cash flow positive in the second half of next fiscal year. The stock jumped 11% in regular trading before retreating 3% following Microsoft's report.
—CNBC's Jordan Novet contributed to this report.
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