Microsoft's AI spending, which fell short of expectations, sent CoreWeave and Nebius shares plummeting
Shares of AI infrastructure providers fell again on October 29 / Photo: PJ McDonnell / Shutterstock.com
Shares of AI cloud infrastructure providers, such as CoreWeave and Nebius, fell during Wednesday's trading after Microsoft's capital expenditures came in below analysts' expectations. This raised concerns that the company’s partners would need more time to bring data center capacity online, Seeking Alpha notes.
Details
After the U.S. market opened on October 29, shares of the neo-cloud companies CoreWeave and Nebius fell by 3% and 5%, respectively, while Iren’s stock plummeted by nearly 7%. This was triggered by the release of Microsoft’s financial results. In its report, the tech giant stated that its capital expenditures in the first quarter of fiscal year 2027 totaled $45.2 billion, compared to the $50.7 billion analysts had expected. Although the company continues to invest heavily in the development of AI infrastructure (its capital expenditures increased by 30% year-over-year in the previous quarter), Microsoft’s AI spending, which fell short of forecasts, has raised concerns in the market that its partners will need more time to bring data center capacity online, according to Seeking Alpha.
In 2025, Microsoft, in particular, signed an agreement with Nebius to provide computing power worth $17.4 billion, with the potential to increase to nearly $20 billion. In addition, the corporation is one of CoreWeave’s largest customers, the portal notes.
Context
Seeking Alpha notes that shares of non-cloud providers have already been under pressure for the past few weeks. Rising interest rates have intensified concerns that borrowing will become too expensive and that lenders will begin to scale back financing.
On October 25, SpaceX CEO Elon Musk warned on X that more than 200 companies providing next-generation cloud infrastructure could go bankrupt. According to him, the debt markets have virtually cut off access to financing for companies that do not have significant revenue outside of the AI data center business. SpaceX itself leases AI infrastructure to Anthropic and Google.
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