Investors Reward Meta, Punish Microsoft as AI Spending Scrutinized

The latest round of quarterly results from the United States’ largest technology firms underscored a new market reality: heavy investment in artificial intelligence continues to be tolerated only when it directly translates into revenue expansion. On Thursday, January 29, Wall Street’s verdict was decisive. Microsoft Corp. lost roughly 10% of its market capitalization, an erosion of more than $350 billion, after growth in its core cloud unit lagged investor hopes. In the same session, Meta Platforms Inc. added about 10%, buoyed by strong advertising gains attributed to AI-driven targeting.

Microsoft, still valued at approximately $3.2 trillion, remains the world’s most highly capitalized public company. Yet its share price has advanced just 7% over the past two years, compared with an 87% surge in Meta’s stock over the same period. The disparity highlights how investors are recalibrating expectations now that the initial enthusiasm following the late-2023 debut of OpenAI’s ChatGPT has given way to questions about profitability and sustained growth.

Azure Growth Falls Short

For the three months ended December 31, Microsoft reported that revenue from its Azure cloud-computing division increased 37%, only marginally above analysts’ consensus forecast. Executives projected similar growth of between 37% and 38% for the current quarter, citing ongoing constraints in the supply of advanced AI chips. The guidance failed to satisfy investors looking for acceleration commensurate with Microsoft’s escalating capital expenditures, which reached $36 billion in calendar 2025.

One area of particular concern is Microsoft’s exposure to OpenAI. The company disclosed that contracts related to the San-Francisco-based startup comprise 45% of its cloud backlog, a figure estimated at roughly $280 billion. Market participants worry that the concentration could become a vulnerability if OpenAI’s competitive position weakens. Internally, OpenAI has reportedly declared a “code red” after Alphabet’s Google unit introduced Gemini 3 to favorable reviews. In addition, Anthropic’s Claude Code has established an annualized run rate exceeding $1 billion, intensifying the pressure on OpenAI to regain momentum.

Beyond cloud services, Microsoft continues to channel significant funds into data centers, networking infrastructure and specialized processors tailored for large-scale AI workloads. These outlays have helped the company secure early leadership in enterprise AI solutions, but they also elevate the bar for revenue growth. Analysts now question whether Microsoft can maintain double-digit expansion without either broader adoption of AI applications or new high-margin services.

Meta Converts AI Into Advertising Dollars

In sharp contrast, Meta reported a 24% year-over-year increase in fourth-quarter revenue, driven largely by AI-enhanced ad placement on Facebook and Instagram. The effectiveness of those tools has allowed advertisers to target users more precisely, thereby raising both engagement and pricing. Meta anticipates first-quarter sales between $38 billion and $40 billion, a range that exceeded the midpoint of Wall Street estimates.

The company is also preparing for a significant jump in capital expenditures, forecasting spending of up to $135 billion for 2026, an increase that could reach 87% compared with 2025. Investors appeared comfortable with the higher budget because AI initiatives are already delivering measurable returns. Some analysts noted that Meta’s ability to monetize AI features in its core advertising business gives it flexibility to invest in longer-term projects such as metaverse hardware without immediate shareholder backlash.

A broader look at the technology sector suggests investors have become more discriminating since the early stages of the AI boom. Firms that can point to concrete financial benefits—whether through advertising, subscription services or productivity tools—are being rewarded even when spending soars. Companies that cannot demonstrate such linkages risk sharp valuation declines.

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Capital Allocation Under the Microscope

Microsoft’s predicament illustrates this shift. While its partnership with OpenAI granted early access to pioneering generative AI technology, the financial payoff has yet to match expectations. Recent competitive advances by Google and Anthropic have fueled concerns that OpenAI’s lead is narrowing. As a result, Microsoft faces both a performance challenge and a concentration risk if OpenAI fails to maintain its trajectory.

Meta’s experience suggests a potential blueprint for satisfying shareholders. By embedding AI models directly into the advertising engine that underwrites most of the company’s revenue, Meta has created a direct feedback loop between research investment and top-line growth. That connection appears to have insulated the company from the scrutiny typically applied to steep capital outlays.

Industry observers note that the coming quarters will test whether Microsoft can convert its AI-related spending into faster cloud growth or new, commercially viable services. Similarly, Meta must demonstrate that its current advertising gains are durable and that anticipated spending does not outpace revenue growth. The performance of both companies will influence broader sentiment toward AI investment across the technology sector.

According to data compiled by S&P Global Market Intelligence, total capital expenditures among the five largest U.S. tech firms climbed above $200 billion in 2025, marking the steepest annual increase in a decade. With borrowing costs elevated and competition intensifying, executives face mounting pressure to prioritize projects that translate quickly into revenue.

For now, the market’s message is clear: artificial intelligence remains a strategic imperative, but its financial benefits must be both visible and substantial. Companies unable to meet that standard are likely to encounter the same reaction Microsoft experienced this week—swift and sizable.

Crédito da imagem: Original source