Microsoft shares rose 8% on strong Azure growth and Copilot adoption. Meta fell 8.5% after missing earnings and revenue guidance, with free cash flow down 91%.
Microsoft shares surged in premarket trading on Thursday. Meta Platforms fell. The two tech giants reported earnings on Wednesday, and investors delivered sharply different verdicts.
Microsoft was last up 8%. Meta was down 8.5%.
The split came down to a single question: which company's AI spending is producing results investors can see?
Microsoft posted fiscal fourth-quarter revenue that beat analyst estimates. Growth at its Azure cloud business hit 43%, ahead of market expectations. The company said it now has over 30 million paid seats for Microsoft 365 Copilot, its AI work assistant, up from more than 20 million as of April.
"Microsoft's strong revenue performance, combined with accelerating Copilot adoption, signals that its $190 billion data-center buildout is beginning to deliver returns," Tracy Woo, principal analyst at Forrester, said in a note on Wednesday.
The stock rose 8% in extended trading on Wednesday. It is down roughly 24% this year.
Meta missed investor expectations on earnings. Its revenue guidance for the current quarter also fell short. The company said it expects revenue of between $61 billion and $64 billion, or $62.5 billion at the middle of the range. Analysts had expected $63.15 billion, according to LSEG.
Free cash flow plunged 91% year-on-year to $784 million as Meta continues to spend on AI infrastructure. Shares slid in extended trading and are down about 16% this year.
Meta CEO Mark Zuckerberg said the company is "getting a lot of offers for compute at a significant premium" over what Meta paid for it. The remark pointed to a potential shift: Meta may begin leasing out excess computing capacity to third parties. Zuckerberg offered few details on what that business could look like. He also acknowledged the company needs to keep compute resources for itself to develop new products.
"Right now, the narrative from Mark Zuckerberg is a little light on detail and relying on what could be done in the future," Ben Barringer, head of technology research at Quilter Cheviot, said in a note on Thursday. "Meta still has a crucial role to play in the AI world, it is still finding its way somewhat. That is why we see both costs and revenues looking a little volatile."
Microsoft's Alpha Score sits at 60 out of 100, a moderate rating. The stock trades at $390.54, down 0.71% on the day.
– CNBC's Jonathan Vanian contributed to this report.
Prepared with AlphaScala editorial tooling from the source reporting linked above. Indexable analysis may include a cited Alpha Score value. Publishing checks screen each story before release. Educational coverage, not personalized advice.