Meta wowed Wall Street with improvements in ad targeting fueled by AI alongside huge investment. Microsoft had less to show for its billions spent
Big tech earnings so far this week have sent a clear warning: investors are willing to overlook soaring spending on artificial intelligence if it fuels strong growth, but are quick to punish companies that fall short.
The contrast was clear in Thursday’s stock market reaction to earnings from Microsoft and Meta, highlighting how dramatically the stakes have changed since the launch of ChatGPT started the AI boom more than three years ago.
Shares of the Instagram parent surged more than 9% on strong sales, while those of Microsoft slumped 10% after its cloud business failed to impress.
“The market appears to be questioning whether these massive capital expenditure hikes will generate sufficient returns,” said Jesse Cohen, senior analyst at Investing.com. “This reflects a growing divide between tech companies’ AI ambitions and Wall Street’s patience for open-ended investment cycles.”
