Microsoft CEO Satya Nadella
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Meta's message to investors: The AI spending will continue until returns improve.Investors' response: No thanks.AI spend was the big focus during Meta's Q2 earnings report. And the pitch wasn't convincing enough to stop an after-hours selloff.Meta was happy to credit AI with helping its advertising business (its bread and butter) rise 27%. And it wasn't just pure growth. Ad impressions grew 14%, while the average price per ad climbed 12%.There's just one catch. Meta is still spending an incredible amount — $31.1 billion, roughly double what it spent last year — on its AI bets. That's eating up a significant portion of its free cash flow, which went from $8.55 BILLION to $784 MILLION. One analyst said the AI strategy is like "throwing spaghetti at the wall."Investors were unimpressed, with Meta's stock falling nearly 10% at one point after the bell.Compare that to another tech giant that reported yesterday: Microsoft. It logged wins in Azure and Microsoft 365 Copilot, which Microsoft CFO Amy Hood touted in her quarterly memo to employees viewed by BI's Ashley Stewart. Perhaps more importantly, its AI budget forecast didn't budge.
