Meta and Microsoft's AI spending: a tale of two earnings reports
Meta and Microsoft reported contrasting investor reactions to their AI spending strategies during recent earnings calls. While Microsoft's stock rose due to clear returns on AI investments, Meta's stock fell as investors expressed concern over the massive, unproven costs of its AI initiatives.
Why it matters
The divergence highlights a critical shift in market sentiment, where investors are increasingly demanding tangible financial returns rather than just long-term promises regarding AI development.
Microsoft CEO Satya Nadella Sven Hoppe/picture alliance via Getty Images This post originally appeared in the Business Insider Today newsletter. You can sign up for Business Insider's daily newsletter here . Meta's message to investors: The AI spending will continue until returns improve. Investors' response: No thanks. AI spend was the big focus during Meta's Q2 earnings report . And the pitch wasn't convincing enough to stop an after-hours selloff. Meta was happy to credit AI with helping its advertising business (its bread and butter) rise 27%. And it wasn't just pure growth. Ad impressions grew 14%, while the average price per ad climbed 12%. There's just one catch. Meta is still spending an incredible amount — $31.1 billion, roughly double what it spent last year — on its AI bets.
Get smarter about the news
Sign up free for a feed built around what you actually care about, Dive Deeper research on any story, and the full text of every article.
Create free accountAlready have an account? Sign in