Microsoft\u2019s spending surged to a record high and cloud sales growth slowed, sending the shares down sharply amid investor concerns that it could take longer than expected for the company\u2019s AI investments to pay off.<\/p>\n
Meanwhile, Meta Platforms got a more positive investor reception after saying it is spending more than anticipated to build out its AI business.<\/p>\n
Microsoft said its capital expenditures for the fiscal second quarter hit $37.5 billion, up 66 per cent from a year earlier and exceeding analyst estimates for $36.2 billion.<\/p>\n
The Azure cloud-computing unit posted a 38 per cent revenue gain during the quarter when adjusting for currency fluctuations, just meeting analysts\u2019 projections. That growth rate slowed \u2014 by a percentage point \u2014 from the prior quarter. The company expects Azure sales to rise 37 per cent to 38 per cent in the current quarter.<\/p>\n
Microsoft shares fell about 7 per cent in extended trading after closing at $481.63 in New York.<\/p>\n
During the analyst call, Microsoft chief executive Satya Nadella said companies are now paying for 15 million subscriptions to the M365 Copilot, Microsoft\u2019s main AI tool for office workers. Adoption is growing among the company\u2019s enormous base of corporate users, Mr Nadella said.<\/p>\n
Total sales increased 17 per cent to $81.3 billion during the quarter, while profit was $5.16 a share, the company said. The net income figure was boosted by gains from Microsoft\u2019s investment in OpenAI, which lifted per-share earnings by $1.02.<\/p>\n
Analysts had expected sales of $80.3 billion and per-share earnings of $3.92.<\/p>\n
Meanwhile, Meta Platforms\u2019 better-than-expected sales outlook helped ease Wall Street concerns about plans for unprecedented spending on artificial intelligence this year.<\/p>\n
The social networking giant topped projections for holiday quarter revenue and gave a strong forecast for the current period during its earnings report Wednesday. Improvements in its online advertising business are making it possible for Meta to spend hundreds of billions of dollars over the next few years on AI infrastructure. Meta\u2019s shares jumped more than 11 per cent in extended trading.<\/p>\n
Meta projected record spending for 2026, driven by chief executive Mark Zuckerberg\u2019s aggressive campaign to amass the infrastructure, computing power and talent that he deems necessary to win a competitive AI race. Mr Zuckerberg has said his strategy centres on \u201cfront-loading\u201d computing capacity in preparation for reaching the company\u2019s goal of superintelligence, a theoretical milestone at which point AI can meet or outperform humans at many tasks.<\/p>\n
To get there, Meta is spending aggressively. The company estimated that full-year capital expenditures will be between $115 billion and $135 billion, exceeding the $110.6 billion average analyst estimate, according to data compiled by Bloomberg.<\/p>\n
Speaking on a call with investors, Mr Zuckerberg said to look forward to \u201ca major AI acceleration\u201d that\u2019s been brewing within the tech industry for over a year. After an overhaul of Meta\u2019s AI program in 2025, Mr Zuckerberg said Meta will soon release new models and products, though the Facebook founder\u2019s near-term expectations were uncharacteristically subdued. <\/p>\n
\u201cI expect our first models will be good, but more importantly, we\u2019ll show the rapid trajectory that we\u2019re on,\u201d he said. He reiterated that Meta\u2019s upcoming models may not wow at launch, but will improve meaningfully over time.<\/p>\n
To finance these expensive projects, Meta is leaning heavily on its advertising business. The owner of Facebook, Instagram and WhatsApp said first-quarter sales will be $53.5 billion to $56.5 billion, beating the $51.3 billion average analyst estimate. <\/p>\n
Investors have historically been anxious about whether Meta\u2019s businesses will benefit meaningfully from its hefty AI investments. But those concerns were tamed on Wednesday. The social media giant reported fourth-quarter sales of $59.9 billion, beating the $58.4 billion that Wall Street expected on average. It was a sign that while spending is up, the core business supporting those investments is also growing faster than expected.<\/p>\n
Zuckerberg was asked on multiple occasions to talk about his vision for an AI business, but kept his answers vague, promising to share more as the year goes on.<\/p>\n
Though Meta\u2019s advertising business will help it weather some of the AI uncertainties, a separate unit continued its considerable losses. Reality Labs, Meta\u2019s unit focused on virtual reality and AI-enabled hardware, posted $955 million in fourth-quarter sales, and an operating loss of more than $6 billion for the fourth quarter. That brought its total losses to more than $19 billion for 2025.<\/p>\n
Mr Zuckerberg told investors that those losses won\u2019t continue forever. \u201cI expect Reality Labs losses this year to be similar to last year, and this will likely be the peak as we start to gradually reduce our losses going forward,\u201d he said. – Bloomberg<\/p>\n","protected":false},"excerpt":{"rendered":"Microsoft\u2019s spending surged to a record high and cloud sales growth slowed, sending the shares down sharply amid…\n","protected":false},"author":2,"featured_media":309647,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[261],"tags":[291,289,290,18,19,17,1722,305,82],"class_list":{"0":"post-309646","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-artificial-intelligence","10":"tag-artificialintelligence","11":"tag-eire","12":"tag-ie","13":"tag-ireland","14":"tag-meta","15":"tag-microsoft","16":"tag-technology"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@ie\/115978084216248235","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/309646","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/comments?post=309646"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/309646\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media\/309647"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media?parent=309646"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/categories?post=309646"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/tags?post=309646"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}