Microsoft Cuts Capex Forecast Amid AI Spending Skepticism
Microsoft Corporation reduced its 2026 capital expenditure forecast by $15 billion following an accounting change to data center depreciation and criticism from investor Michael Burry.
Investor Michael Burry has questioned the necessity of aggressive artificial intelligence spending by Microsoft Corporation and other Big Tech firms. Burry suggested these companies are spending excessively under the assumption they will be granted an "oligopoly too big to fail."
This skepticism follows a significant accounting shift implemented by Microsoft at the start of fiscal 2027. The company extended the assumed useful life of its office buildings and data centers from 15 to 25 years. This change reclassifies more leases as operating leases rather than finance leases, resulting in a $15 billion reduction in the calendar 2026 capital expenditure forecast, lowering it from approximately $190 billion to $175 billion.
Chief Financial Officer Amy Hood stated that spending plans remain unchanged outside of this accounting adjustment. However, the shift reduces yearly depreciation, which may make earnings appear stronger while obligations appear smaller. Despite the lower expenditure forecast, Microsoft's future data center lease commitments rose from $196.6 billion to $329.1 billion in a single quarter.
