Microsoft’s AI Business Keeps Accelerating. Meta’s Profit Miss Shakes Investor Confidence And Its Stock Plunges

Microsoft and Meta Platforms delivered sharply different messages to investors Wednesday as the two technology giants reported quarterly earnings under intense scrutiny over their multibillion-dollar artificial intelligence investments.

The reports, released after the closing bell, come at a pivotal moment for the AI industry. Investors have increasingly questioned whether the massive spending by the world's largest technology companies is translating into meaningful financial returns.

The earnings from Microsoft and Meta were widely viewed as one of the biggest tests of that thesis this quarter. Microsoft impressed 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.

The results helped send Microsoft's shares higher in after-hours trading after a challenging year in which the stock had come under pressure over concerns about escalating AI infrastructure costs.

Despite the strong performance, 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, however, faced a much cooler reception. The Facebook and Instagram parent reported second-quarter earnings of $6.18 per share, well below Wall Street expectations of approximately $7.19 per share. Revenue reached $60.8 billion, narrowly exceeding analyst forecasts, but the earnings miss overshadowed the modest revenue beat.

Shares plummeted in extended trading following the release. Investors also focused on Meta's continued commitment to enormous AI investments. The company updated its projected 2026 capital expenditures to between $130 billion and $145 billion.

Meta also forecast third-quarter revenue between $61 billion and $64 billion, a range that was viewed as slightly softer than analysts had anticipated. Chief Executive Mark Zuckerberg has repeatedly defended the company's AI strategy, arguing that building advanced models and infrastructure will strengthen Meta's advertising business while creating new products ranging from AI assistants to enterprise services.

Microsoft's strong cloud performance suggested that enterprise customers continue adopting AI-powered services at a pace capable of supporting the company's heavy infrastructure investments.

Meta, by contrast, continues to rely primarily on advertising revenue while asking shareholders to remain patient as its AI ambitions expand into areas that have yet to produce significant commercial returns.

The earnings reports also arrive after Alphabet recently increased its own AI investment plans, adding to concerns that hyperscale technology companies are engaged in an increasingly expensive race to build next-generation computing capacity. Combined, Microsoft, Meta, Alphabet and other major technology firms are expected to spend hundreds of billions of dollars on AI infrastructure over the coming year.