Microsoft exceeds Wall Street expectations, driven by AI, while Meta struggles with high spending
The largest investment in artificial intelligence in history is beginning to show up on the bottom line. While Microsoft closed the quarter with record revenue of $90 billion and net income of $35.8 billion, driven by the cloud and Copilot, Meta saw its profit fall 14% due to the burden of spending on A.I., litigation and layoffs.
XBOX and Microsoft logos
Microsoft reported better-than-expected quarterly results on Wednesday, driven by strong growth in its cloud and artificial intelligence divisions. The company reported revenue of $90 billion and net income of $35.8 billion in the last quarter of its fiscal year, which ended in June. These figures partially alleviated investors' concerns about whether heavy investments in A.I. are paying off.
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CEO Satya Nadella highlighted that Copilot, the A.I.-powered productivity tool, already has more than 30 million paying users. In addition, Microsoft recorded a gain of $3.2 billion from its investment in Anthropic and acknowledged that its stake in OpenAI contributed $480 million to the quarter's profit and $4.9 billion for the full fiscal year. The company's stock rose more than 8% in after-hours trading.
Meta's stock falls on A.I. spending
In contrast, Meta Platforms reported a 14% drop in profits, to $15.8 billion, weighed down by extraordinary charges of $2.4 billion related to litigation and $1.2 billion in severance payments. Although revenue grew by 28% to $60.8 billion, exceeding forecasts thanks to advertising, investors reacted with skepticism to the high spending on A.I. Meta's stock fell as much as 12% after the market closed.
According to AFP, Meta reaffirmed that it will continue to invest heavily in the data centers and chips that underpin its commitment to artificial intelligence, and informed investors that it now expects capital expenditures of between $130 and $145 billion this year—nearly double what it spent in 2025 and slightly above its latest forecast.
"A.I. is accelerating our core business today, powering our next generation of products, and opening the door to entirely new enterprise opportunities," said Mark Zuckerberg in a statement.
A.I. sector set to reach $700 billion this year
Meta raised its capital expenditure estimate to between $130 billion and $145 billion this year, nearly double the amount for 2025.
The U.S. tech sector, led by Amazon, Microsoft, Alphabet and Meta, is on track to invest around $700 billion this year alone in data centers, chips and A.I. infrastructure.
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