AI cloud stocks dip as Microsoft and Alphabet cut capital spending

Shares of Fastly (NASDAQ:FSLY) slipped 6% to $25.43 in midday trading, while Oracle (NYSE:ORCL) and Nebius Group (NASDAQ:NBIS) each dropped about 3% to $140.57 and $177.56 respectively. The declines followed reports that two of the largest buyers of AI computing power, Microsoft and Alphabet, spent less on capital projects in the most recent quarter than Wall Street had forecast. Microsoft disclosed $45.2 billion in capital expenditures and finance leases for the quarter, missing the consensus estimate of $50.7 billion and falling short of its own $50 billion target. CFO Amy Hood said the shortfall was due in part to delayed deliveries of third-party capacity, but she added that customer demand still exceeds available supply and that spending is expected to rise above $50 billion next quarter. Alphabet reported $51.36 billion in capital expenditures, $4 billion below the consensus of $55.09 billion, contributing to an 11% drop in its stock price. Analysts noted that slower spending by these hyperscalers could delay revenue growth for AI cloud providers that rely on their purchasing, though no specific supplier was named.

"Customer demand continues to exceed available supply," Hood said.