Microsoft Outperforms Earnings Expectations, Meta Faces Skepticism on AI Investments
Two major tech companies reported their quarterly earnings after the market closed. Microsoft exceeded expectations with strong Azure cloud growth and a conservative capital expenditure forecast, leading to positive reactions from analysts who praised its progress in monetizing AI investments. In contrast, Meta fell short of earnings estimates and raised concerns among investors by increasing its capex guidance without showing clear returns on its substantial AI spending. Meta's CEO Mark Zuckerberg emphasized the company’s flexible business model during a call with analysts but faced skepticism over how it plans to leverage computing capacity for enterprise growth beyond advertising. Analysts questioned when Meta would see material returns from its investments and expressed confusion about potential conflicts of interest if the firm starts leasing out servers while also purchasing external compute resources. Microsoft's stock rose 7% following its report, whereas Meta’s shares dropped by a similar margin immediately after earnings were released.
Topics: artificial intelligence cloud computing Meta (META) Microsoft (MSFT) Wall Street reaction