Wall Street reacts differently to Meta’s, Microsoft’s AI spending

Meta’s stock rose 10% after its earnings. At the same time, Microsoft’s shares fell by the same amount—losing over $357 billion in market value—as the earnings season revealed a stark divergence in Wall Street’s view on big artificial intelligence investments.

Meta posted a 24% year-over-year gain in the fourth quarter and projected capital expenditure of up to $135 billion for 2026, holding steadfast on CEO Mark Zuckerberg’s massive AI spending.

Microsoft, meanwhile, delivered revenue slightly above expectations, but its Azure cloud grew 39%, just below last quarter’s 40%. Analysts say this may have made its $37.5 billion quarterly spend harder for investors to swallow.

Meta’s performance signaled to investors that AI is effectively boosting its core advertising business.

Notably, Microsoft’s contracted future revenue heavily relies on one of its biggest investments: OpenAI, but the Zuckerberg company doesn’t.

Beyond the tech giants, IBM shares rose 5% as its AI book of business more than doubled. ServiceNow stock plummeted 10% amid fears that AI could reduce the need for traditional software licensing models.

Overall, investors are closely watching companies’ AI spending and related profits.