In after-hours trading, the stock prices of companies such as CoreWeave, Nebius, and neocloud fell, as Microsoft's capital expenditure data falling short of expectations indicated that it might take longer for its infrastructure partners to deliver the data center capacity required.
Microsoft announced on Wednesday that its capital expenditures and finance leases for this quarter totaled $45.2 billion, an increase of about 30% from a year ago, but this is lower than the average forecast of $50.7 billion compiled by analysts from StreetAccount.
As Microsoft continues to invest in artificial intelligence infrastructure, the company relies heavily on neocloud to provide its computing capacity. At the end of last year, Microsoft signed a deal worth nearly $20 billion with Nebius to purchase computing power for the next several decades. It is also one of the important customers of CoreWeave.
The market performance of these companies and their peers has not been stable in the past few weeks, due to rising interest rates that have sparked concerns in the market: the cost of borrowing will be higher in the future, and lenders will also begin to tighten their lending policies.
In its financial report, Microsoft stated that Azure revenue increased by 48% year-on-year, far exceeding the growth rate of capital expenditures.
Microsoft stated in its financial report presentation materials: 'Revenue growth exceeded capital expenditures due to the time lag between receiving goods and making payments, as well as a lower proportion of finance leases.'
After Microsoft announced its financial results, CoreWeave and Nebius both fell by nearly 5%, while IREN fell by about 3%.
Alphabet On Wednesday, it also announced capital expenditure figures that fell short of expectations. The total capital expenditure for this parent company of Google was $51.36 billion, whereas analysts were expecting $55.09 billion.
SpaceX CEO Elon Musk predicted over the weekend that more than 200 neocloud companies will go bankrupt. He posted on X, saying, "The debt market has almost completely cut off any channels for providing funding to companies that do not have substantial revenue from AI independent data centers."
Last Monday, analysts from Gartner indicated to CNBC that they expect 80% of neocloud companies to be acquired or cease operations completely by 2030.
After a significant decline this month, the neocloud sector saw a mild rebound on Monday, with CoreWeave rising by 18% over the past three trading days, leading the sector. Analysts at Wolfe Research wrote in a report on Tuesday that they expect the stock to rebound to the mid-70s dollar range. The stock closed at $63.93 on Wednesday.
Earlier on Wednesday, the infrastructure narrative gained support as Oracle released strong long-term revenue prospects and indicated that it would return to positive free cash flow in the second half of the next fiscal year. The stock rose by 11% during regular trading hours but fell back by 3% after Microsoft announced its financial results.
—— CNBC's Jordan Novet contributed to this report
