- Microsoft and Meta's capital spending on compute infrastructure jumped significantly in the final quarter of 2025
- Investors have doubts about Microsoft's spending should demand fall off
- Microsoft's (and Oracle's) order backlog is heavily dependent on OpenAI
Meta and Microsoft both revealed big jumps in capital spending as they work to bring more data centers and compute capacity for AI online. But there’s a reason that the pair’s stock prices shot in opposite directions the morning after they reported earnings.
Here’s a quick rundown: Microsoft revenue jumped 17% year on year to $81.3 billion in its fiscal Q2 2026. Its capex also climbed, though, from $22.6 billion to $37.5 billion. Two-thirds of that was spent on “short-lived assets” including GPUs and CPUs, CFO Amy Hood said during its earnings call.
Meanwhile, Meta’s revenue rose 24% to $59.9 billion. It spent $22.1 billion in capex, primarily on data centers, servers and network infrastructure. That figure was up from $14.8 billion in Q4 2024. Executives on the call expressed confidence in Meta’s ability to cover the rising costs with cash generated by its business.
While spending for both rose, Microsoft's order backlog is of greater concern.
Microsoft's big backlog
In fiscal Q2 2026, Microsoft’s backlog (aka, its “remaining performance obligations”) hit a record $625 billion. That figure was up from $392 billion the previous quarter and $298 billion the year prior. CFO Amy Hood said on the call nearly half – 45% – of that backlog is attributed to OpenAI. Hood said around 25% of Microsoft's backlog is expected to be recognized as revenue in the next 12 months.
Oracle is the only other hyperscaler with a similarly-sized backlog ($523 billion as of December) that is also largely driven by OpenAI via a $300-billion cloud contract.
“That’s a lot of hope-and-a-prayer that OpenAI will be able to deliver. And recognizing any potential upside will require significant capex,” Blake Crawford, CIO of IT consulting firm Fusion Collective, told Fierce.
“I’d be willing to price some of that in, but in Microsoft’s bread-and-butter enterprise segment, Anthropic has a stronger foothold and only represents about $30 billion of the backlog," he continued.
Does Meta face similar concerns?
Asked whether he has similar concerns about the ROI for Meta’s rising spending, Crawford said no. “Meta doesn't have their future plans as dependent upon other AI players. Microsoft, on the other hand, has 45% of its financial future tied up in commitments from OpenAI, and it isn’t immediately obvious that OpenAI will continue to be able to pay up."
In a blog published earlier this month, OpenAI indicated it expects to hit $20+ billion in annual run rate revenue in 2026. But reports from the Wall Street Journal late last year suggested OpenAI lost $12 billion in a single quarter and expects its losses to rise to $40 billion in 2027.
Crawford isn’t the only one to raise a flag on the OpenAI demand. Jeffries analyst Brent Thill pushed Microsoft executives on this point during the company’s earnings Q&A, asking them to respond to “concern about the durability” of its backlog and the potential risk of “exposure.”
Hood argued in return that 55% (or $343.7 billion) of its backlog is attributed to “a breadth of customers, across solutions, across Azure, across industries, across geographies,” adding “frankly, I think we have super high confidence in it.”