Microsoft Soars 15%, Meta Sinks 8% as AI Trade Splits
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- Microsoft shares jumped 15% Thursday after Q4 revenue beat estimates and Azure cloud grew 43%, adding nearly $450 billion to market cap in the company's best single day since 2008.
- Microsoft 365 Copilot now has over 30 million paid seats, up from more than 20 million as of April, according to the company, signaling accelerating enterprise adoption of its AI work assistant.
- Meta missed on both earnings and revenue guidance, forecasting current-quarter revenue of $62.5 billion at the midpoint versus the $63.15 billion analysts expected per LSEG.
- Meta's free cash flow collapsed 91% year-over-year to $784 million as AI spending continued to bite, dragging the stock down for an 11th consecutive session and over 20% across that stretch — a record losing streak.
- Zuckerberg said Meta is "getting a lot of offers for compute at a significant premium" over what it paid, though Quilter Cheviot's Ben Barringer noted the narrative is "light on detail" on what a compute-leasing business would actually look like.
- Microsoft reiterated its 2026 capital expenditure forecast and signaled a potential spending expansion into fiscal 2027, even as markets grow jittery over AI infrastructure costs.
Why it matters: Microsoft's $450 billion single-day market cap gain validates its $190 billion data-center buildout, with Forrester's Tracy Woo saying returns are arriving through Azure and Copilot. Meta's 91% free cash flow collapse and record 11-day, 20%+ losing streak show the market is unwilling to extend the same patience to Zuckerberg — whose vague compute-leasing pitch failed to offset the guidance shortfall.
