Microsoft Soars 9%, Meta Tanks 9% as AI Trade Splits Big Tech
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- Microsoft shares surged 9% in premarket trading after its fiscal Q4 revenue beat estimates and Azure cloud posted 43% growth, ahead of market expectations.
- Microsoft reported over 30 million paid seats for Microsoft 365 Copilot — up from 20 million in April — with Forrester analyst Tracy Woo saying the $190 billion data-center buildout is "beginning to deliver returns."
- Meta shares slid 9% after the company missed earnings expectations and guided current-quarter revenue of $61-64 billion, a $62.5 billion midpoint below the $63.15 billion analysts expected per LSEG.
- Meta's free cash flow plunged 91% year-on-year to $784 million as heavy AI capital spending continued to weigh on the company.
- Mark Zuckerberg said Meta is "getting a lot of offers for compute at a significant premium," floating the idea of leasing excess computing capacity to third parties as a potential new business line.
- Microsoft reiterated its 2026 capital expenditure forecast and signaled potential spending expansion in fiscal 2027; the stock remains down roughly 24% year-to-date.
- Quilter Cheviot's Ben Barringer said Zuckerberg's narrative is "a little light on detail and relying on what could be done in the future."
Why it matters: Investors drew a sharp line between AI spenders: Microsoft's 43% Azure growth and Copilot seats jumping from 20M to 30M gave the market concrete payoff evidence, while Meta's guidance miss and 91% free cash flow collapse exposed the cost of heavy AI bets without visible revenue traction — and left Zuckerberg's compute-leasing tease under scrutiny.
