Microsoft expects about $190 billion of capital expenditures in calendar 2026, up 61% from 2025, and reports fiscal fourth-quarter results on Wednesday, July 29. Azure and other cloud services grew 39% in constant currency last quarter, with supply still the bottleneck rather than demand.
Microsoft told investors in April that it expects about $190 billion of capital expenditures in calendar 2026, up 61% from 2025, as it builds the data centers its cloud computing and artificial intelligence businesses demand. The company reports results for the fourth quarter of its fiscal year on Wednesday, July 29 — the next test of whether Azure keeps growing fast enough to pay for that build-out.
What the $190 billion commits Microsoft to
Chief financial officer Amy Hood added a detail that sharpens the number: about $25 billion of the spending buys no additional capacity and simply covers higher component prices, as memory and storage costs surge across the industry. In its fiscal third quarter of 2026, which ended March 31, capital expenditures including finance leases were $31.9 billion, up 49% year over year. Management guided for over $40 billion in the quarter it reports Wednesday.
That calendar-year plan works out to well over half of the revenue the company's current pace implies for a full year. Capital spending does not stay on the balance sheet, either: as data centers come online, depreciation flows into the income statement and can weigh on margins for years.
Azure growth is still accelerating
On the demand side, Azure and other cloud services revenue rose 40% year over year in fiscal Q3, or 39% in constant currency — an acceleration from 38% constant-currency growth in fiscal Q2. Management guided for 39% to 40% constant-currency growth again in fiscal Q4.
Supply, not demand, remains the bottleneck. Hood said in April that the company expects "to remain constrained at least through 2026". Microsoft's AI business, meanwhile, has reached an annual revenue run rate of $37 billion, up 123% year over year.
Profits and the stock heading into the print
Fiscal third-quarter revenue climbed 18% year over year to $82.9 billion, with Microsoft Cloud accounting for $54.5 billion of it. Operating income increased 20% to $38.4 billion, while earnings per share jumped 23% to $4.27. For the fiscal fourth quarter, management guided for revenue of $86.7 billion to $87.8 billion, implying 13% to 15% year-over-year growth.
The shares closed Friday at $381.70, down about 31% from their 52-week high of $555.45, and trade at about 23 times earnings. Headline numbers arrive first, but Azure's growth rate and the capacity commentary around it may matter more for how the stock reacts.
Source: Motley Fool
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