Microsoft forced to up AI spending by $25 billion to cover hardware price rises says it 'remains confident in the return on these investments'

Date:
Thu, 30 Apr 2026 12:15:00 +0000

Description:
Microsoft expects a $190 billion capex in fiscal 2026, but around $25 billion of that is believed to come from rising costs.

FULL STORY ======================================================================Copy link Facebook X Whatsapp Reddit Pinterest Flipboard Threads Email Share this article 0 Join the conversation Follow us Add us as a preferred source on Google Newsletter Subscribe to our newsletter Azure revenue is up 29%, but next quarter's growth could rise 40% Two-thirds of last quarter's capex was dedicated to CPUs, GPUs Microsoft 365 Copilot now has over 20 million paying customers In its latest quarterly results, Microsoft has confirmed an 18%
rise in revenue to $82.9 billion for the most recent three months, with Microsoft Cloud revenue up around 29% year-over-year to $54.5 billion and Azure growth standing at around 40%.

However despite heavy spend by customers in its products and services, the company hasn't been immune from rising prices and global chip shortages, CFO Amy Hood explained . With its AI business now standing at around $37 billion in annual revenue run rate (up 123% year-over-year), Microsoft is being
forced to spend big on AI and data center technology. Article continues below You may like Cloud spending soars as hyperscalers up AI investment - and
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Consequentially, 2026 capex is expected to be around the $190 billion mark, but alarmingly, Microsoft is attributing around $25 billion of that to rising component costs. The company is also set to spend $40 billion on hardware and data centers in the next quarter, Hood revealed.

That's a marked increase over last quarter's $31.9 billion capex, two-thirds of which was destined for "short-lived assets" like CPUs and GPUs.

Speaking about the fiscal year capex projections, Hood said: "We remain confident in the return on these investments given higher demand signals and increasing product usage as well as the efficiencies we're already driving across the platform." Are you a pro? Subscribe to our newsletter Sign up to the TechRadar Pro newsletter to get all the top news, opinion, features and guidance your business needs to succeed! Contact me with news and offers from other Future brands Receive email from us on behalf of our trusted partners
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As for AI use, Microsoft declared "over 20 million Microsoft 365 Copilot paid seats" and noted considerable growth in major customers. It has has 4x as
many customers with over 50,000 seats, compared with last year Accenture represents the biggest customer, with over 740,000 seats.

Looking ahead, the company is targeting total revenue growth of 13-15% for
the next period, but more importantly, around 39-40% in Azure revenue growth. Follow TechRadar on Google News and add us as a preferred source to get our expert news, reviews, and opinion in your feeds.



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Link to news story: https://www.techradar.com/pro/microsoft-forced-to-up-ai-spending-by-usd25-bill ion-to-cover-hardware-price-rises-says-it-remains-confident-in-the-return-on-t hese-investments


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