Key facts
- Microsoft reported record quarterly profit driven by AI growth.
- Meta's profits declined due to significant AI spending.
- Meta's stock fell nearly 10% after its earnings report.
- Meta reported earnings per share below Wall Street estimates.
- Meta's revenue slightly exceeded expectations.
- Mark Zuckerberg highlighted AI's role in enhancing Meta's apps and advertising.
- Microsoft CEO Satya Nadella is pitching homegrown AI models and infrastructure.
- Microsoft is considering releasing some of its AI models with open weights.
- Meta narrowed its 2026 capital expenditure forecast to $130 billion-$145 billion.
- Meta's free cash flow dropped 91% year-over-year to $784 million in Q2.
- Arm Holdings projected second-quarter revenue above Wall Street estimates.
- Microsoft reported a $3.2 billion gain from its Anthropic investment.
Microsoft has achieved record quarterly profits, with its AI ventures, including Azure and Copilot, serving as primary drivers. The company also reported a $3.2 billion gain from its investment in Anthropic for its fiscal fourth quarter, which contributed 33 cents to its earnings per share. However, Microsoft also recorded a $600 million markdown on its OpenAI investment, reducing earnings per share by 7 cents.
In contrast, Meta Platforms is facing investor concerns due to significant AI spending, which has led to a decline in profits and a nearly 10% drop in its stock price after reporting earnings per share below Wall Street estimates, despite revenue exceeding expectations. Meta's free cash flow saw a 91% year-over-year decrease, reaching $784 million for the second quarter, largely due to substantial investments in AI infrastructure. The company has narrowed its 2026 capital expenditure forecast to a range of $130 billion to $145 billion, an increase from its previous projection, as it expands its AI computing power through data center investments.
Meta CEO Mark Zuckerberg indicated the company might rent out its scarce computing capacity, though investors remain skeptical. Meanwhile, Microsoft CEO Satya Nadella is actively positioning the company as a provider of its own AI models and infrastructure, encouraging enterprises to utilize multiple models and avoid vendor lock-in with OpenAI and Anthropic. He specifically highlighted Microsoft's MAI model family and Maya chips as cost-effective alternatives. Furthermore, Microsoft is considering releasing some of its internally developed AI models with open weights, a move that would provide an alternative to the growing number of Chinese AI models and align with industry calls against broad restrictions on open-weight AI.
Arm Holdings has projected second-quarter revenue exceeding Wall Street estimates, driven by strong demand for its energy-efficient chips used in AI data centers. This positive outlook for Arm follows Microsoft's Azure cloud growth surpassing expectations, suggesting a potential easing of concerns regarding AI infrastructure spending.