Microsoft and Meta delivered divergent earnings reports that prompted contrasting investor reactions, with Microsoft shares climbing 9% in premarket trading while Meta shares dropped 9%, according to financial market data.
Microsoft Azure Growth and Copilot Adoption Drive Stock Gains
Microsoft posted fiscal fourth-quarter revenue that surpassed analyst expectations, fueled by a 43% growth rate in its Azure cloud computing division, according to the company’s earnings report. Furthermore, the technology giant announced that Microsoft 365 Copilot, its workplace artificial intelligence assistant, has reached over 30 million paid seats, marking a significant increase from more than 20 million seats reported in April.
“Microsoft’s strong revenue performance, combined with accelerating Copilot adoption, signals that its $190 billion data-center buildout is beginning to deliver returns,” Tracy Woo, principal analyst at Forrester, said in a note.
Despite reiterating its 2026 capital expenditure forecast and signaling potential spending expansion for the 2027 fiscal year, Microsoft’s stock rose 8% in extended trading following the announcement.
Meta Misses Revenue Guidance as Free Cash Flow Plunges
Meta experienced a sharp downturn as the social media company missed analyst expectations on earnings and issued weaker-than-expected revenue guidance for the current quarter. According to LSEG data, Meta projected current-quarter revenue between $61 billion and $64 billion, averaging $62.5 billion, which fell short of the $63.15 billion consensus anticipated by analysts.
At the same time, Meta reported a 91% year-on-year plunge in free cash flow down to $784 million as heavy spending on artificial intelligence infrastructure continued. Meta shares declined in extended trading on Wednesday, adding to a year-to-date drop of approximately 16%.
Zuckerberg Signals Potential Compute Leasing Amid Evolving AI Strategy
Meta CEO Mark Zuckerberg stated that the social media giant is receiving numerous offers for computing capacity at a significant premium over acquisition costs, hinting at a potential strategic shift toward leasing excess resources to third parties. However, analysts noted that concrete operational details regarding this potential business model remain sparse.
“Right now, the narrative from Mark Zuckerberg is a little light on detail and relying on what could be done in the future,” Ben Barringer, head of technology research at Quilter Cheviot, said in a note. Barringer added that while Meta retains a crucial role in the artificial intelligence sector, it is still finding its footing, contributing to ongoing volatility in both costs and revenues.
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Frequently Asked Questions
How did Microsoft perform in its latest earnings report?
Microsoft reported fiscal fourth-quarter revenue that beat analyst estimates, driven by a 43% growth rate in its Azure cloud business and over 30 million paid seats for Microsoft 365 Copilot.
Why did Meta’s stock drop following its earnings release?
Meta missed analyst expectations for earnings and current-quarter revenue guidance, while reporting a 91% year-on-year drop in free cash flow due to high artificial intelligence spending.
What did Meta CEO Mark Zuckerberg say about computing capacity?
Zuckerberg noted that Meta is receiving offers for compute at a significant premium, raising the possibility of leasing out excess capacity, though analysts pointed out that details on the initiative remain limited.
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