If you’re going to spend, you better grow. That was the clear message the market sent today after two critical Mag 7 earnings reports.
Meta Platforms (META) and Microsoft (MSFT) each released quarterly results last night, producing sharply different responses.
The two tech giants continue to spend heavily on AI. This has been a persistent source of worry for investors and a headwind for the stocks, both of which had meaningfully lagged the broader market over the last three months.
But even though META actually lifted its capital expenditure guidance for next year to a whopping $125 billion at the midpoint, the shares rallied more than 10% today. META demonstrated that this enormous investment in AI is actually accelerating growth.
META shareholders were rewarded after the company handily exceeded consensus analyst forecasts across key revenue and operating profit metrics.
MSFT shares, meanwhile, were severely punished today, trading down 10%. The main concern was that growth in its Azure cloud segment, while a healthy 39%, fell short of expectations and was now facing capacity-related bottlenecks.
