Microsoft's Capex Spending for 2026 Is 23% Higher Than What Analysts Were Expecting. The Problem Is Rising Memory Prices

Microsoft (NASDAQ: MSFT) and other tech giants are investing heavily in artificial intelligence (AI) these days, and the big concern is that those budgets continue rising. There have already been concerns that AI investments won't pay off, and higher-than-expected investments only exacerbate those worries.

When Microsoft reported earnings last week, its stock didn't surge. It wasn't because the company fell short of expectations. In fact, its growth rate was better than what analysts expected. Instead, the stock appeared to fall due to a significant increase in its forecast for capex this year.

Image source: Getty Images.

Microsoft projects capex will total $190 billion for the year

The tech giant has been investing aggressively in AI due to the opportunities to enhance its products and services in that area. And for 2026, it now expects its total capex to be $190 billion -- that's a 61% increase from the previous year. That's also roughly 23% higher than what analysts were expecting ($154.6 billion). The problem is that the cost of memory has been surging due to inflated demand in the tech sector. The company alluded to that on its earnings call, with Amy Hood, the company's chief financial officer, saying that $25 billion of that spend was due to "higher component pricing."

News of the higher-than-expected capex budget overshadowed what should have otherwise been a stellar quarter for Microsoft. The company's results were strong and came in better than what analysts expected for both revenue and earnings per share. Unfortunately, with the market focused heavily on capex these days, that was likely a key reason the tech stock didn't rally following the release of its earnings numbers.

Why I wouldn't be worried about Microsoft's stock

Heighted memory prices may be putting a dent in Microsoft's spending plans this year, but that's a temporary problem. As supply catches up to demand, memory prices should inevitably come down in the future; it's really just a matter of when that happens. And more importantly, with Microsoft having an abundance of software and tech products that can benefit from AI, it's more likely to benefit and profit from AI investments than other tech companies. High capex should be less of a concern for growth investors when it comes to Microsoft.

If Microsoft's stock proceeds to fall in the weeks ahead because the market is overly concerned about capex, then that could be your opportunity to pounce on what's already a fairly attractively priced stock today. With tremendous growth potential and a robust, diversified business, the tech stock is one of the best investments you can hold in your portfolio for the long term.

David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft. The Motley Fool has a disclosure policy.