Microsoft lowered its capital expenditure outlook for the 2026 calendar year to $170 billion from $175 billion, a rare downward revision in a sector that has spent the past two years revising spending plans only upward. Chief Financial Officer Amy Hood disclosed the cut on the fiscal first-quarter earnings call Wednesday, attributing it to delays in third-party GPU-as-a-service contracts that were supposed to deliver new capacity earlier in the year. The company now expects that capacity to arrive in the second half of its fiscal year, at which point spending should accelerate again.
The numbers behind the cut
Revenue for the quarter ended Sept. 30 rose 19% to $92.3 billion. Azure grew 48% to more than $33 billion, topping consensus estimates. Shares climbed about 3% in after-hours trading. The market appeared to treat the capex reduction as a timing issue rather than a demand signal, rewarding the beat on the top line while the spending forecast moved in the opposite direction of most peers.
What the delay actually means
Hood said the postponed contracts involve outside providers that run Nvidia GPUs on Microsoft's behalf. Those partners have been grappling with the same constraints hitting the broader data-center buildout: power availability and local permitting fights. Microsoft has leaned on these arrangements to supplement its own construction pace, so a slip in a partner's delivery schedule shows up immediately in the company's own capital plan. The CFO framed it as a deferral, not a cancellation, and reiterated that the full-year trajectory remains intact once the delayed capacity comes online.
Workforce reduction runs in parallel
Separately, Microsoft offered a voluntary buyout to more than a quarter of its employees. The company estimates no more than 5% of those eligible will take it, citing internal growth opportunities. Headcount fell 2% during the quarter. The move coincides with the capex recalibration, though the two are structurally distinct, one a response to partner delivery schedules, the other a routine workforce management step in a year when hiring has slowed across the sector.