AI build-out hits snag as Google and Microsoft put off raising capex forecasts (www.cnbc.com)

Microsoft and Google have announced capital expenditures (capex) that fell short of analysts' expectations, raising concerns about the future of AI infrastructure development. Microsoft CFO Amy Hood revealed potential delays from third-party chip providers, pushing available capacity to the first half of 2027. This setback reflects broader worries about neoclouds—smaller cloud providers that require substantial capital for expansion but lack investment-grade credit ratings, particularly as rising interest rates amplify fears about debt levels. Shares of key neocloud players and Oracle declined following these announcements, signaling investor unease in the sector. Despite the capex shortfalls, the AI build-out is not expected to slow considerably. Microsoft's optimistic long-term view anticipates acceleration in capital spending in 2027, driven by higher component costs and delayed deliveries. Overall, hyperscaler capex is projected to exceed $1 trillion next year. While Alphabet also faced declines in its earnings reports, analysts see potential in the AI-led growth trajectory, particularly with Microsoft's Azure cloud business demonstrating impressive sales growth at 48%. As demand for AI infrastructure continues to rise, the market remains poised for significant developments, despite current challenges in capital availability for neocloud companies.