Microsoft soars, Meta sinks: AI spending is splitting Big Tech in two

Key points

• Microsoft shares rose 9% in premarket trading after quarterly results beat analyst forecasts.
• Azure, Microsoft's cloud computing service, grew 43% year-on-year, ahead of expectations.
• Microsoft 365 Copilot, the company's AI work assistant, now has more than 30 million paying users, up from 20 million in April 2025.
• Meta shares fell 9% after the company missed earnings expectations and forecast lower revenue than analysts anticipated.
• Meta's free cash flow dropped 91% year-on-year to $784 million as AI spending surged.

Two of the biggest names in tech reported earnings the same day. Investors rewarded one and punished the other. That split tells you a lot about where confidence in AI spending currently sits.

What did Microsoft actually show investors?

Microsoft delivered hard numbers that backed up its AI promises. Azure, its cloud platform where businesses rent computing power over the internet, grew 43% compared to the same period last year, beating what Wall Street had pencilled in.

The figure that caught most attention was Copilot. Microsoft 365 Copilot is the AI assistant built into the Office suite. It now has 30 million paying subscribers, up from 20 million just three months ago. Our earlier story on the full-year results noted that Azure revenue crossed $100 billion for the full year and that a few caution flags remain worth watching.

That growth matters because Microsoft has spent roughly $190 billion building the data centres needed to run AI services. Analysts wanted proof that spending was translating into actual revenue. Wednesday's results gave them some.

"Microsoft's strong revenue performance, combined with accelerating Copilot adoption, signals that its $190 billion data-centre buildout is beginning to deliver returns," Tracy Woo, principal analyst at research firm Forrester, wrote in a note on Wednesday.

The stock had already fallen about 24% this year, so the 9% jump in premarket trading was welcome relief for shareholders.

Why did Meta have such a bad night?

Meta missed. The social media company fell short of investor expectations on both profit and the revenue forecast for the coming quarter.

Meta guided for revenue of $61 billion to $64 billion this quarter, putting the midpoint at $62.5 billion. Analysts had expected a midpoint of $63.15 billion, according to financial data firm LSEG. Missing a revenue forecast might sound technical, but it signals the business is growing more slowly than hoped.

The cash flow number was brutal. Free cash flow, the money a company has left after paying its bills and investing in its operations, collapsed 91% year-on-year to just $784 million. AI spending is the main culprit.

CEO Mark Zuckerberg did offer one intriguing idea: the company's been approached by businesses willing to pay a premium to use its spare computing capacity. In plain terms, Meta could rent out extra AI hardware the way a landlord rents spare rooms. But Zuckerberg gave almost no detail on how that would work, and he acknowledged the company still needs most of that capacity for its own products.

"Right now, the narrative from Mark Zuckerberg is a little light on detail and relying on what could be done in the future," said Ben Barringer, head of technology research at investment firm Quilter Cheviot, in a note published Thursday. "Meta still has a crucial role to play in the AI world, but it is still finding its way somewhat and that is why we see both costs and revenues looking a little volatile."

Meta shares are now down around 16% for the year. This is consistent with the investor anxiety our earlier piece on Google's cost overruns flagged: when AI spending outpaces visible returns, markets don't wait patiently.

What does this mean for ordinary people?

Copilot's adoption is clearly gaining real traction, not just marketing momentum, so office workers should expect it woven deeper into daily software over the coming months. Meta's AI push is costing the company so much that it's carrying far less financial cushion than a year ago, and that pressure doesn't disappear quietly.