MSFT
The AI appetite is still outrunning the kitchen
Microsoft isn’t exactly tapping the brakes. During its Q3 earnings call, the company said it now expects capital spending to reach nearly $190 billion in calendar 2026, with more than $40 billion just in the fourth quarter. Translation: the AI infrastructure bill keeps getting fatter, and Microsoft is still paying.
Supply chain pain, but make it manageable
CFO Amy Hood said the company is doing its best to get hardware in as fast as possible, while insisting Microsoft is “quite good” at handling the bottlenecks. The constraints are mostly about speed — CPUs, GPUs, storage, data centers — not some scary permanent shortage. So yes, the pipes are clogged, but Microsoft says it knows where the wrench is.
Copilot is doing its little victory lap
The spending surge is tied to demand across Azure and Copilot, which Microsoft says is seeing stronger usage trends across coding, productivity, and security tools. That matters because this is the whole AI-playbook in one sentence: build more capacity, hope adoption keeps screaming higher, and try not to let margins melt like an ice cream cone in July.
Why investors should care
Microsoft also said fiscal 2026 operating margins should still expand by about one percentage point year over year, even with the spending and about $900 million in one-time retirement-related costs. That’s the key tension here: the company is growing fast, but the AI arms race is getting very expensive.
Big picture: Microsoft’s Q3 was good. The real headline is that the AI infrastructure race is nowhere near done — and neither is the capex tab.