Microsoft and Alphabet spent US$97 billion on AI infrastructure in one quarter. About US$29 billion of it went into buildings, where the copper is.
Both companies booked less capex than the market wanted on 28 October, and Microsoft blamed rented capacity that arrived late. Copper closed near US$6.64 a pound the same day. The metal is priced off the slice of the budget that turns into shells, power and cooling, and that slice is the smaller one.
Two of the largest buyers of AI infrastructure reported on the same evening, and both told the same story in different words. Microsoft said its capital spending came in at US$45.2 billion because “some third party capacity deliveries we expected in Q1 were delayed” [Microsoft earnings call, transcript via The Singju Post, 28 Oct 2026]. Alphabet said it spent US$51.4 billion and that its full-year range of US$195 billion to US$205 billion “remain unchanged” [Alphabet earnings call via Investing.com, 28 Oct 2026]. Alphabet’s shares, which closed the regular session at US$322.22, traded at US$288.35 after hours [Investing.com, 28 Oct 2026].
For a materials desk the headline capex number is the wrong one to watch. Both companies also said how the money splits, and most of it does not go into the part of a data center that consumes copper, aluminum, transformers and switchgear. This piece is the sequel to our 21 October reading of Trafigura’s two copper scenarios, which hinged on how much announced capacity actually gets built. The 28 October filings are the first hard look at that question this quarter.
What’s happening
- Microsoft: three quarters chips. CFO Amy Hood said “roughly three quarters of our CapEx was for short lived assets, primarily CPUs and GPUs.” Finance leases were US$7.4 billion and cash paid for property and equipment was US$39.4 billion [Microsoft earnings call transcript, 28 Oct 2026]. The press release shows additions to property and equipment of US$39.367 billion against US$19.394 billion a year earlier [Microsoft FY27 Q1 press release, 28 Oct 2026]. By desk arithmetic, the remaining quarter of US$45.2 billion is about US$11 billion.
- Alphabet: 65/35. CFO Anat Ashkenazi said “approximately 65% of our investments in technical infrastructure in Q3 was related to servers and networking equipment” and “the remaining 35% was for data centers” [Investing.com transcript, 28 Oct 2026]. Applied to US$51.4 billion, that is about US$18 billion of data center construction (desk arithmetic; Alphabet gives the split for technical infrastructure, not for every dollar of capex).
- Combined. US$96.6 billion of capex across the two companies, of which roughly US$29 billion, or about 30 percent, went into longer-lived assets and buildings (desk arithmetic from the two splits above).
- The outlook did not shrink much. Hood said Q2 capex “will be over $50 billion” and that “for the calendar year, spend should be approximately $170 billion due to the 3P capacity delays.” Alphabet said it continues “to expect our CapEx to increase significantly in 2027” [both transcripts, 28 Oct 2026].
- Copper did not flinch. COMEX front-month copper settled at about US$6.64 a pound on 28 October, against the highest close in the two-year series of about US$6.80 on 9 September [COMEX HG=F via Yahoo Finance, fetched 29 Oct 2026]. Teck, reporting the same day, said Q3 copper prices “averaged US$6.40 per pound,” a record [Teck Q3 2026 release, 28 Oct 2026].
Why the split matters more than the total
A GPU is mostly silicon, packaging and memory. The copper-heavy part of an AI campus is the building, the substation, the busway, the transformers and the cooling plant. On the desk’s reading, those sit in the quarter of Microsoft’s spending that is not short-lived and in Alphabet’s 35 percent. Microsoft’s delay was in third-party capacity, which it books as finance leases “at the time of lease commencement” [Microsoft transcript, 28 Oct 2026]. Microsoft did not say why those deliveries slipped. A delayed lease start moves Microsoft’s booking date; it does not tell us whether the third party’s building and power gear are already installed.
Alphabet now sits on both sides of that trade. Ashkenazi said that “given the supply-constrained environment, we started utilizing third-party compute capacity at the end of Q3,” and Google Cloud’s backlog reached US$561 billion, of which the company expects to recognize “just over 55%” over the next 24 months [Investing.com transcript, 28 Oct 2026]. That is roughly US$309 billion of contracted revenue in two years (desk arithmetic), a book of business that someone has to house.
Satya Nadella gave the physical count: Microsoft added “24 new data centers across five continents this quarter” and cut dock-to-live times for new GB300 systems “by about 20% quarter over quarter” [Microsoft transcript, 28 Oct 2026].
Brazil angle
Brazil’s exposure runs through the building share, not the chips. Microsoft’s largest single commitment in the country, R$14.7 billion over three years for cloud and AI infrastructure across “several datacenter campuses in the state of São Paulo,” was announced on 26 September 2024 [Microsoft News Center Brasil, 26 Sep 2024]. At BRL 5.2 to the dollar that is about US$2.8 billion, or roughly 6 percent of what Microsoft booked in this single quarter, spread over three years (desk arithmetic). Counted from the announcement, the three-year window closes in September 2027.
Lula, now re-elected, said Brazil should use its renewable potential “to bring here the data centers needed to store our data in Brazil” and that he does not want to keep “depending on Chinese or American artificial intelligence” [pv magazine, 27 Oct 2026]. The Redata regime enacted in September ties its incentives to renewable or low-emission electricity supply [pv magazine, 27 Oct 2026]. Both point at the slice that the 28 October numbers show is the smaller one: land, power contracts and buildings. That share is where Brazil can compete, and it is also where the copper and the grid connections are.
US angle
Microsoft’s calendar 2026 figure of about US$170 billion and Alphabet’s US$195 billion to US$205 billion range are both largely US-sited, and both companies said the next leg is bigger. Microsoft expects its second-half spending to “accelerate primarily from CPUs, inclusive of higher memory and storage costs, and GPUs” [Microsoft transcript, 28 Oct 2026]. Memory and storage costs are a chip-side line. For US copper fabricators and transformer makers, the relevant number is the 25 to 35 percent building share, applied to a total that both companies say keeps rising.
China and LATAM angle
On the supply side, the copper that feeds those buildings is still tied up in Beijing’s review of the Anglo American and Teck merger. China’s market regulator has asked for “assurances on copper concentrate supply, including volumes sold through traders,” and the deal “has received approval from all regulators where the companies operate except China” [Reuters via Kitco, 2 Oct 2026]. Teck said on 28 October that the merger “remains on track to close within the originally stated 12–18 months” [Teck Q3 2026 release, 28 Oct 2026].
Teck’s own quarter shows how thin the mine side is. Copper output rose 11 percent to 115,700 tonnes, but Quebrada Blanca in Chile produced 47,200 tonnes, down from 55,800 tonnes in Q2, after August storms caused power outages and cut access to higher-grade ore; Teck kept QB’s 2026 guidance at 200,000 to 235,000 tonnes [Teck Q3 2026 release, 28 Oct 2026]. In Canada, about 1,200 United Steelworkers members at Highland Valley Copper are on strike and the mine runs at reduced capacity [Canadian Press via CP24, 29 Oct 2026].
What it means
The market reading of 28 October was a capex miss. The materials reading is different. The part of the budget that slipped was rented capacity, which Microsoft books as leases, and the outlook for both companies still rises. Meanwhile the copper-intensive share of spending is only about 30 percent of the total in this quarter’s numbers. That means a hyperscaler can miss on capex by several billion dollars while its building and power program barely moves, and the reverse: a big headline raise driven by GPU and memory prices adds less copper than the dollar figure suggests. Copper at about US$6.64 is pricing mine disruptions in Chile and Canada and a merger awaiting Beijing at least as much as it is pricing hyperscaler budgets.
What to watch
- Microsoft’s fiscal Q2 capex, expected in late January 2027. Hood guided to “over $50 billion.” A figure below US$50 billion would mean the third-party delays have not cleared; watch whether the short-lived share stays near three quarters.
- Alphabet’s Q4 results, expected in early February 2027. The company promised a significant 2027 increase. Watch whether the data center share moves off 35 percent; a higher share means more buildings per dollar, and more copper.
- SAMR’s ruling on Anglo American and Teck before the March 2027 target date. Conditions on concentrate sales to China would decide where a combined producer’s copper goes while Highland Valley’s strike and Quebrada Blanca’s recovery are still unresolved.
