Microsoft Is Soaring After Its Earnings And There Is Renewed Appetite For Chipmakers. Stocks Are Rebounding

Stocks are rebounding on Thursday, fueled by Microsoft's gains and renewed appetite for semiconductors.

The tech-heavy Nasdaq Composite jumped 2.26% at 10:22 a.m. ET, while the S&P 500 gained 1.16%. The Dow Jones Industrial Average increased by 0.64%.

Microsoft jumped more than 14% at the same time after impressing Wall Street with stronger-than-expected fiscal fourth-quarter results, fueled by continued momentum in its cloud computing and AI businesses.

The software giant reported revenue of $90 billion, an 18% increase from a year earlier, while adjusted earnings reached $4.81 per share. Both figures topped analyst expectations, which had called for revenue of roughly $87.6 billion and earnings of $4.24 per share.

Azure, Microsoft's cloud platform and a key barometer of enterprise AI demand, posted 43% growth, outperforming forecasts and reinforcing investor confidence that businesses continue to expand spending on AI-powered cloud services.

Investors remain focused on Microsoft's future capital spending. The company is expected to invest approximately $145 billion during fiscal 2026 as it races to build the computing infrastructure needed to support AI services. Analysts will continue watching whether those investments generate sustained growth in Azure, Microsoft 365 Copilot and other AI products.

Meta stands on the other end of the spectrum. Its stock is plummeting more than 9% after raising the lower end of its 2026 capital expenditure forecast to between $130 billion and $145 billion, signaling that spending on AI infrastructure remains a top priority despite mounting investor concerns over the pace of investment.

The guidance increase came alongside another quarter of strong revenue growth, but shrinking free cash flow renewed questions about how quickly those investments can begin producing meaningful financial returns.

The spending increase reflects Meta's strategy of building AI capacity years before demand fully materializes. During the company's earnings call, Chief Executive Mark Zuckerberg said computing infrastructure has become a strategic asset and revealed that Meta has received offers from businesses willing to pay a premium for access to some of its compute capacity. Rather than positioning Meta as a traditional cloud provider, however, he said the company's long-term objective is to use that infrastructure to power its own AI products and services, according to a passage of the earnings call.

Analysts said the company's investment profile increasingly resembles that of the world's largest hyperscale cloud providers, while its revenue base remains overwhelmingly tied to digital advertising, Reuters reported.

Meta executives argue that comparison overlooks how the company expects AI to reshape its core business. Zuckerberg said Meta sees consumer AI assistants, personalized recommendations, business automation tools and AI agents as long-term revenue opportunities that could eventually support subscriptions, enterprise services and new commercial products. He added that selling compute capacity could become another business over time, but suggested the higher-margin opportunity lies in selling AI-powered "intelligence" rather than simply renting infrastructure.