CoreWeave Slides After Microsoft Reports Lower AI Spending

CoreWeave and Nebius shares fell approximately 5% in extended trading on Wednesday following Microsoft's quarterly earnings release. The decline followed a report that Microsoft's capital expenditures fell short of Wall Street projections, raising questions about the pace of data center delivery for artificial intelligence infrastructure.

Microsoft disclosed $45.2 billion in capex and finance leases for the quarter. This figure represented a 30% increase from the previous year but lagged the $50.7 billion average analyst estimate, according to StreetAccount. Microsoft relies heavily on neocloud partners to meet its AI capacity needs. The company signed a nearly $20 billion agreement with Nebius last year for compute resources through the 2030s and remains a top customer for CoreWeave.

The sector has faced pressure in recent weeks as rising interest rates have heightened concerns over the cost of future debt financing. Microsoft noted in its earnings materials that Azure revenue increased 48% year over year, outpacing the growth in capital spending. The company attributed this divergence to timing differences in receiving goods versus payment, alongside a lower mix of finance leases.

Other major technology firms reported similar results on Wednesday. Alphabet, the parent company of Google, recorded capex of $51.36 billion, missing the $55.09 billion expected by analysts. The broader uncertainty was compounded by comments from industry figures. Elon Musk, CEO of SpaceX, stated over the weekend that more than 200 neocloud companies will fail. He posted on X that debt markets have largely closed to companies without substantial revenue independent of AI data centers.

Analysts at Gartner published a prediction last Monday that 80% of neocloud companies will be absorbed or cease operations by 2030. The neocloud sector had attempted a recovery earlier in the week after a steep decline. CoreWeave was up 18% over the three prior trading days, leading the gains. Analysts at Wolfe Research had written on Tuesday that they expected the stock to rebound into the mid-$70s. CoreWeave closed Wednesday at $63.93.

Oracle provided a contrasting data point earlier in the day. The company issued a strong long-term revenue forecast and projected a return to free cash flow positive status in the second half of its next fiscal year. Oracle stock jumped 11% in regular trading on that news. It subsequently retreated 3% after Microsoft's earnings report. IREN shares fell about 3% in the same post-market session.

Microsoft's results suggest that hyperscalers are managing cash flow carefully while scaling AI capabilities. The discrepancy between revenue growth and capital outlay has intensified scrutiny on the financial models of infrastructure partners. Investors are now monitoring whether neoclouds can sustain their debt loads as lenders tighten credit terms.