Meta Platforms shares rocketed 8% to $776.64 Thursday, while Microsoft plunged 11% in a stark post-earnings split that exposed investor fatigue with unchecked AI spending. Both tech titans beat Wall Street estimates, yet the market rewarded Meta’s advertising firepower and punished Microsoft’s decelerating Azure growth amid ballooning capital outlays. This divergence signals a shift: Wall Street now demands proof of AI returns, not just promises.

Meta reported fourth-quarter 2025 revenue of $59.89 billion, up 24% year-over-year and topping estimates of $58.59 billion, per CNBC. Earnings per share hit $8.88, surpassing forecasts of $8.23. CEO Mark Zuckerberg declared, “We had strong business performance in 2025. I’m looking forward to advancing personal superintelligence for people around the world in 2026,” according to Meta’s investor release cited by Meta Investor Relations. Ad impressions rose 18%, fueling the beat.

Microsoft posted Q2 fiscal 2026 revenue of $81.27 billion, edging past $80.27 billion expected, with adjusted EPS at $4.14 versus $3.97 anticipated, as detailed by CNBC. Yet Azure cloud growth slowed to 39% from 40% prior, and capital expenditures plus finance leases soared 66% to $37.5 billion, exceeding $34.31 billion forecasts. Finance chief Amy Hood noted Azure would have hit 40% growth “if the company had funneled all of its new GPU chips in the first and second quarter into its Azure business.”

Ad Revenue Shields Meta’s Bold Bets

Meta’s capex guidance of $115 billion to $135 billion for 2026—nearly double 2025’s $72.22 billion—drew cheers, as investors saw direct ties to ad efficiency. Finance chief Susan Li said Q1 revenue guidance of $53.5 billion to $56.5 billion was “underpinned by the strong demand that we saw through the end of Q4 and continuing into the start of 2026,” per CNBC. Zuckerberg added Meta will release new AI models “over the coming months,” expecting to “steadily push the frontier.” Daily active users across apps reached 3.58 billion, up 7%.

Analysts hailed the results. “Meta appeared to gain approval from investors to keep putting money into AI,” wrote CNBC. Shares had underperformed the S&P 500 earlier, up just 2.6% since January 2025 versus the index’s 13.8%, per S&P Global, making the surge a rebound.

Reality Labs losses persist, but core Family of Apps drove operating profit estimates of $23.94 billion. Total 2026 expenses are pegged at $162 billion to $169 billion, with capex growth tied to “Meta Superintelligence Labs efforts and core business,” Meta stated.

Microsoft’s Capacity Crunch Sparks Skepticism

Microsoft’s cloud revenue hit $51.5 billion, up 26%, but the Azure slowdown and capex spike fueled doubts. Compute constraints persist as demand outstrips supply, with 45% of backlog linked to OpenAI. Net income jumped to $38.46 billion, boosted by OpenAI investment gains, but adjusted figures excluded those impacts.

X posts captured the sentiment. “Meta jumped 10% after earnings. Microsoft dropped 7%. Both beat estimates. Both are spending billions on AI. So why the opposite reactions? The difference: Meta showed the receipts. Microsoft showed the bill,” posted @itsjayinvesting. Traders noted Meta’s ad targeting improvements versus Microsoft’s “murky” ROI.

Broader capex worries loom. Analysts at Deutsche Bank warned investor fears over earnings drag from spending “could somewhat outweigh optimism around faster growth,” per CNBC. Goldman Sachs forecasts $125 billion in 2026 capex across hyperscalers, rising to $144 billion in 2027.

Sector Ripples Hit Software Peers

The split bled into tech. ServiceNow tanked 11% after CEO Bill McDermott defended its model amid AI disruption fears, saying “Enterprise AI will be the largest driver of return on the multi-trillion dollar supercycle,” via CNBC. IBM rose 8%, with AI bookings doubling to $12.5 billion; Goldman Sachs called it “on track to complete its pivot to long-term growth.”

Meta’s Q1 outlook beat consensus of $51.41 billion, while Microsoft’s Azure guidance implied 37% growth. X trader @fundamentaly_ contrasted: “Microsoft: The ‘Trust Me’ Discount… Meta: The ‘Receipts’ Premium.” Pre-earnings, both stocks corrected toward support, per CNBC technicals.

Microsoft returned $12.7 billion to shareholders, up 32%. Yet shares lag, down 11% in three months versus S&P’s 1% gain. Meta’s trajectory? Zuckerberg eyes AI glasses sales tripling, likening it to smartphones’ rise.

Investor Verdict on AI Payoffs

This earnings clash underscores maturing AI scrutiny. Meta proved investments enhance core ads—impressions up 18%, prices 6%—delivering immediate lift. Microsoft, despite beats, faces questions on when capacity builds yield margins. “Wall Street doesn’t reward AI spending anymore. It rewards AI returns,” as one X analyst put it.

Forward, Meta targets Family of Apps growth offsetting Reality Labs losses at 2025 levels. Microsoft eyes Copilot seats at 15 million, up 160%, but must clarify Azure acceleration. Broader Magnificent Seven ETF rose 1% year-to-date, mixed amid volatility.

As Alphabet and Amazon loom next week, the message is clear: Show AI driving profits now, or brace for backlash. Meta’s green light on spending contrasts Microsoft’s yellow, reshaping Big Tech valuations in 2026.