Microsoft Jumps 9% on AI Demand, Meta Falls on Miss
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- Microsoft jumped 9% in after-hours trading after reporting $90.01 billion in quarterly revenue, beating estimates, and revealing Azure growth of 43% at constant currency.
- Microsoft announced capital expenditures of $41 billion in Q4, a 69% increase, with plans to extend data center building lives and shift leases to support an expected $175 billion in future capex.
- Meta Platforms fell nearly 9% after reporting EPS of $6.18, missing estimates by $1.04, and issuing third-quarter revenue guidance below analyst expectations.
- Federal Reserve held interest rates steady after its July 2026 meeting, maintaining a 'wait-and-see' stance as traders price in a potential September rate hike.
- 30-year Treasury yield rose 10 basis points to above 5.2%, its highest level since 2007, following the Fed's decision and reinforcing a higher-for-longer rate outlook.
- Stephen Evans of Pave Finance stated Microsoft is increasing profits while spending heavily on AI, whereas Meta’s costs are eroding its bottom line, creating a divergence in investor confidence.
Why it matters: Microsoft gains credibility and investor capital by demonstrating profitable AI scaling, while Meta faces pressure to prove returns on its $135–150B AI spend; the Fed’s unchanged rates and rising long-term yields increase financing costs for tech’s big capex plans, making execution efficiency more critical.
