4Q26 Preview – Time to Take Back the Narrative

研报英文原文证据摘录

4Q26 Preview – Time to Take Back the Narrative

FoundationMunlike prior quarters, we are not currently expecting to materially revise our own

forecasts following F4Q26 results (see Exhibit 16 ). Our model already incorporates

a more aggressive multi-year investment cadence than consensus, reflecting

management's latest guidance around sustained AI infrastructure investments,

continued capacity expansion (mgmt. planning to double total DC footprint over

next two years) and a greater mix of short-lived assets. Importantly, on the F3Q26

earnings call, CFO Amy Hood indicated that Microsoft expects ~$190bn of total

capex in CY26, including ~$25bn of higher component pricing, while reiterating that

the company expects to remain capacity constrained through 2026 despite these

investments. Further, management noted roughly two-thirds of capex continues to

be allocated toward short-lived assets, primarily GPUs and CPUs, reinforcing the

direct link between infrastructure investments and future revenue growth.

Consistent with this framework, our estimates already imply Microsoft modestly

increases quarterly capex sequentially through the F2H27 from ~$64bn capex

estimate for F2Q27. We believe the more likely outcome from here is for Street

estimates to move toward our forecasts, rather than our own forecasts moving

materially higher post the F4Q26 print.

Our Latest Capex-Implied AI Revenue Analysis: Our capex assumptions have

consistently been revised higher. Therefore, we lean on our capex driven forecast

model to yield our sustained bullish conclusions about the trajectory of Azure

growth, which continues to suggest significant upside to our forward Azure

forecasts, despite recently raising our Azure revenue estimates with our recent deep

dive.