Microsoft shares jumped 15% on Thursday after fiscal fourth-quarter revenue and 43% Azure growth beat estimates, while Meta's stock fell nearly 8% for an 11th straight day as its revenue guidance missed expectations and free cash flow plunged 91%. The split comes as investors weigh Microsoft's Azure growth and Copilot adoption against Meta's guidance miss and shrinking free cash flow.
Microsoft shares jumped 15% on Thursday. Meta's stock, meanwhile, fell nearly 8% as investors gave differing verdicts on the two tech giants' earnings.
Microsoft's Azure growth reassures investors
On Wednesday, Microsoft posted fiscal fourth-quarter revenue that beat analyst estimates. Its Azure cloud business grew 43%, also ahead of market expectations. The company also said it now has over 30 million paid seats for Microsoft 365 Copilot, its AI work assistant, up from more than 20 million in April.
Microsoft posted its best day since 2008, even as it reiterated its 2026 capital-expenditure forecast and signaled a potential spending expansion in fiscal 2027, at a time when the stock market is jittery over the cost of AI. Forrester analyst Tracy Woo said the $190 billion data-center buildout is beginning to deliver returns, pointing to Microsoft's revenue performance and accelerating Copilot adoption.
Meta's guidance misses, and free cash flow plunges
Meta's report told a different story: the company missed investor expectations on earnings and its revenue guidance for the current quarter. Meta said it expects revenue this quarter of between $61 billion and $64 billion, or $62.5 billion at the midpoint. Analysts had expected guidance of $63.15 billion, according to LSEG.
At the same time, Meta's free cash flow plunged 91% year-on-year to $784 million as it continues to spend on AI. Meta's stock sank for an 11th straight day, a record losing streak, and is down over 20% in that time. Evercore ISI analyst Mark Mahaney said a lack of forward clarity for 2027 spending is one factor weighing on the stock.
Zuckerberg eyes leasing out AI compute capacity
Meta CEO Mark Zuckerberg said the company is "getting a lot of offers for compute at a significant premium" over what it paid, a sign Meta could start leasing out its excess computing capacity to third parties. The report offered few details on what such a business might look like, and Zuckerberg acknowledged Meta will still need to keep compute for itself to develop new products.
Quilter Cheviot's head of technology research, Ben Barringer, said Zuckerberg's narrative is a little light on detail and relying on what could be done in the future. He added that Meta still has a role to play in AI but is still finding its way, leaving both costs and revenue looking a little volatile.
Sources: CNBC, MarketWatch (snippet-based)
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