Why did Microsoft’s capital spending trigger a decline in cloud providers’ shares?

  • Microsoft said delivery of third-party cloud computing capacity had been delayed. Its capital spending for the third quarter of calendar 2026 was approximately 45.2 billion dollars, below previous expectations of more than 50 billion dollars. Shares of CoreWeave and other listed emerging cloud providers fell after the announcement.
  • Evercore ISI assumed a capital spending shortfall of 5 billion to 6 billion dollars and computing infrastructure capital spending of 30 million to 35 million dollars per megawatt, estimating on that basis that approximately 150 to 200 megawatts of capacity had been delayed.
  • Microsoft said GPU-as-a-service contracts had been deferred to the second half of its fiscal 2027, equivalent to the first half of calendar 2027. The firm therefore concluded that this looked more like a delivery postponement than a contract cancellation.

Is the delayed capacity CoreWeave’s?

  • Microsoft did not identify the affected third-party supplier. Evercore ISI believes the supplier responsible for the capital spending shortfall may not be CoreWeave.
  • The firm noted that Microsoft also purchases computing capacity from emerging cloud providers including IREN, NBIS and Nscale; contracted delivery dates for some other providers also overlap with the second half of calendar 2026.

What supports CoreWeave, and where do the risks lie?

  • Evercore ISI values CoreWeave’s record of delivering infrastructure at scale: its active computing capacity has reached 1.5 gigawatts, and its order backlog is relatively diverse. Compared with new entrants, the firm expects a higher proportion of CoreWeave’s future EBITDA to come from contracts already underway.
  • Customer concentration remains a significant constraint: Microsoft and OpenAI together account for approximately 80% of CoreWeave’s revenue. Although the company is trying to diversify its customer base, major customers’ purchasing arrangements remain important to its business.
  • The firm also noted that CoreWeave assumes a six-year useful life for GPUs, while Nvidia’s annual release of new products could increase the risk of equipment obsolescence. Securing power and data center infrastructure and deploying large clusters also involve execution risks.
  • Evercore ISI rates CoreWeave Outperform, with a price target of 150 dollars, based on a valuation of approximately 10 times calendar 2027 enterprise value to EBITDA.