Bernstein: Microsoft Has Not Overbuilt AI Capacity, 100 Billion Lease Commitments Misinterpreted by Market

TechFlow reports, According to Chaoxiang Research, Bernstein's August 10 research report pointed out that Microsoft's current lease liabilities increased by 33% year-over-year to $114.4 billion, future lease obligations surged by 255% year-over-year to $329.1 billion, and fiscal year 2027 purchase commitments reached $169 billion.

The report believes the market has misinterpreted these figures: existing leases are spread over a 13-year term, with rent expiring in 2027 totaling approximately $13.2 billion; the $329.1 billion in future leases will commence sequentially between 2027 and 2033. Assuming an average lease term of 12 to 15 years, the annualized rent growth rate is approximately 12% to 16%, roughly in line with Microsoft's historical commercial cloud revenue growth; among the $169 billion in purchase commitments, GPU servers account for only a portion and are concentrated within 12 months, with only $25 billion for fiscal year 2028 and beyond.

The report maintains Microsoft's "Outperform" rating, raising the price target from $647 to $660, and the P/E multiple from 26.5x to 27x. Bernstein believes that data center designs support hybrid deployment of CPUs and GPUs; if AI demand slows, capacity can be shifted to traditional cloud business. AI accounts for approximately 16% to 17% of Microsoft's commercial cloud revenue, but since AI gross margin is approximately 27%, far lower than traditional cloud business, AI accounts for approximately 40% of commercial cloud cost of sales. Management stated during the Q4 earnings call that current demand still far exceeds available supply.