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Data Centres: Boom and Backlash
8SEP

The big four's combined capex holds near $732bn

3 min read
13:06UTC

Amy Hood put Microsoft's calendar-2026 capex near $175bn after extending the assumed life of data-centre buildings to 25 years, a figure widely conflated with separate fiscal-2027 guidance.

IndustryAssessed
Key takeaway

Separating fiscal from calendar years leaves big-four 2026 capex near $732bn, barely above May's $725bn.

Microsoft reported its fiscal fourth quarter on Wednesday 29 July with $41bn of quarterly capital expenditure, roughly two thirds of it short-lived assets such as processors⁠1. Chief financial officer Amy Hood said extending the assumed useful life of data-centre buildings from 15 to 25 years, and shifting new capacity from finance leases to operating leases, puts Microsoft's calendar-2026 capital spending at approximately $175bn.

Microsoft's widely quoted $255bn to $260bn guidance covers its fiscal 2027, which runs from July 2026 to June 2027. Adding that number to calendar-year figures for the other three companies inflates the combined total by roughly $80 billion, and several outlets did exactly that this week. A useful-life assumption is not a rounding convention either: stretching a building from 15 years to 25 spreads the same concrete over ten more years of depreciation, which flatters reported earnings without changing a single pour.

Meta reported quarterly capital expenditure of $31.08bn including finance-lease principal payments, against $17.0bn a year earlier, and narrowed full-year guidance to $130bn-$145bn from $125bn-$145bn⁠2. The ceiling did not move. Alphabet raised to $195bn-$205bn on 22 July.

Add the four on a like-for-like calendar-2026 basis and the range runs $720bn to $745bn, a midpoint near $732bn. We reported $725bn for the same four in May. Each individual raise reads as acceleration; the aggregate has moved about one per cent, because Meta's narrowing and Microsoft's correctly framed calendar figure offset the raises elsewhere. Amazon, Microsoft, Alphabet and Meta are redistributing roughly $732bn between themselves rather than adding to it.

Deep Analysis

In plain English

Big tech companies report their spending plans on two different calendars: a fiscal year, which for Microsoft runs to the end of June, and the calendar year everyone else uses. When Microsoft mentioned a $255bn-$260bn figure, that covers July 2026 to June 2027, not this calendar year. Its actual 2026 spending, after an accounting change to how long it assumes its buildings will last, is closer to $175bn. Mixing up the two calendars makes it look like tech spending on AI data centres is accelerating faster than it really is.

Deep Analysis
Root Causes

The underlying structural cause of the confusion is that Microsoft's fiscal year runs to 30 June, so its FY2027 guidance spans July 2026 to June 2027, a period that overlaps but does not match calendar 2026. Adding Microsoft's fiscal figure to the other three hyperscalers' calendar-year figures inflates the apparent combined total by roughly $80bn, an error of measurement rather than a real change in spending.

The useful-life extension itself has a structural driver: data-centre buildings, as distinct from the servers and chips inside them, physically last longer than software-era depreciation schedules assumed, so accounting is catching up to the asset's actual service life.

What could happen next?
  • Meaning

    The widely reported acceleration in big-tech AI capex is largely an artefact of conflating Microsoft's fiscal and calendar years, not a genuine sector-wide surge.

First Reported In

Update #12 · Ofgem prices the grid queue by the megawatt

Microsoft· 4 Aug 2026
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Written with AI from Lowdown's published reporting. Not individually reviewed by an editor. Editorial standards.