Microsoft’s capex outlay this year would be enough to buy every outstanding share of Disney
CFO Amy Hood said on last night’s earnings call that the company will spend $190 billion on capex in 2026.
Microsoft beat analysts’ estimates for third-quarter earnings and revenue on Wednesday, powered by strong cloud demand and a surging AI business, but questions still lingered about how much its bets on artificial intelligence will pay off.
The solution? Pump even more capital expenditure into the infrastructure it thinks will enable AI in the future. And the numbers are eye-popping.
On last night’s earnings call, CFO Amy Hood said Microsoft spent $31.9 billion on capex in Q3, but looking forward, the company expects to spend a whopping $190 billion in 2026. For perspective, that’s enough money to buy every outstanding share of Disney and have about $10 billion left over.
Microsoft’s competitors are also eyeing gargantuan capex outlays this year. Last night on their earnings calls, Meta said it would spend between $125 billion and $145 billion, Google said it plans on spending between $180 billion and $190 billion, and Amazon said it would spend $200 billion.
Microsoft also discussed a shift in how business customers are choosing to license their software. The traditional per-user “seat” model is being supplanted with “seat plus consumption” as users devour more AI tokens for agentic work in the company’s productivity apps.
Microsoft CEO Satya Nadella said on the call:
“Any per-user business of ours, whether it’s productivity, coding, security, will become a per-user and usage business. That’s the best way to think about it.”
Microsoft’s earnings release also offered positive signs that its AI services are picking up steam. Nadella said the company now has 20 million Microsoft 365 Copilot paid seats, up 250% year on year.
The company still has a massive $627 billion backlog of booked business, also known as remaining performance obligations, or RPO, which is up 99% year on year. However, if you take OpenAI’s huge chunk of booked business out of that bucket, the RPO for the third quarter went up just 26%, in line with “historic seasonality.”
Looking forward, Hood said that 25% of that RPO will be recognized on the books in the next 12 months, up 39% year on year.
It also said it expects “modest acceleration” in its AI-powering cloud business in the second half of the calendar year.
Shares were down 4.3% in recent trading.
