- Microsoft shares surged nearly 15% after stronger-than-expected quarterly results and AI growth
- Azure cloud business grew 43%, surpassing market estimates and boosting confidence in AI strategy
- Microsoft 365 Copilot reached over 30 million paid seats, showing rapid adoption of AI tools
Shares of Microsoft surged nearly 15% on Thursday after the software giant reported stronger-than-expected quarterly results and robust growth in its artificial intelligence business. In contrast, Meta Platforms fell about 9% after disappointing investors with weaker earnings and a softer revenue forecast, highlighting how the AI race is creating clear winners and losers on Wall Street.
The sharp move pushed Microsoft toward one of its biggest single-day gains in years, while Meta extended its recent selloff, with the stock on track for an 11th straight losing session and down more than 20% over that period.
Microsoft's rally came after the company reported fiscal fourth-quarter results that beat analyst expectations. A key highlight was 43% growth in Azure, its cloud computing business, which exceeded market estimates and reinforced confidence in Microsoft's AI strategy.
The company also said Microsoft 365 Copilot now has more than 30 million paid seats, up from over 20 million reported in April. The rapid adoption suggests businesses are increasingly paying for Microsoft's AI-powered productivity tools.
Despite maintaining its capital expenditure guidance for fiscal 2026 and indicating spending could rise further in fiscal 2027, investors welcomed the results as evidence that Microsoft's massive AI investments are starting to generate returns.
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The company recently disclosed that Azure generated more than $100 billion in annual revenue, underscoring the growing importance of its cloud business as demand for AI services accelerates.
Meta delivered a different message to investors. While the company continues to invest aggressively in artificial intelligence, its latest quarterly results fell short of market expectations.
The company forecast third-quarter revenue between $61 billion and $64 billion, below analysts' expectations of $63.15 billion at the midpoint. Investors were also concerned after free cash flow dropped 91% year-on-year to $784 million, reflecting the rising cost of AI infrastructure and data centre expansion.
Meta has been spending billions of dollars to build AI computing capacity, but investors remain focused on when those investments will translate into stronger earnings growth.
During the earnings call, CEO Mark Zuckerberg said Meta has been receiving offers from companies willing to pay a premium to use its computing infrastructure. The comments suggest Meta could eventually lease excess AI computing capacity to third parties, creating a potential new source of revenue.
However, Zuckerberg said the company also needs significant computing power for its own AI products, providing few details about how such a business might develop.
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