A wave of investor optimism swept through Wall Street as
Meta and Microsoft shares soared following robust earnings and deepening
commitments to artificial intelligence. Meta jumped 12% and Microsoft gained 5%
after reporting results that easily topped analysts’ forecasts, with both
companies outlining major capital expenditure plans to fuel their growing AI
ambitions.
Microsoft’s rally pushed it past a $4 trillion market cap
for the first time, placing it alongside Nvidia in the exclusive
trillion-dollar club, CNBC reported. The milestone came as the software giant reported an 18%
year-over-year revenue increase in its fiscal fourth quarter, reaching $76.44
billion. Its net income climbed to $27.23 billion, or $3.65 per share, from
$22.04 billion a year earlier.
Meta delivered a similarly strong performance, reporting
$47.52 billion in second-quarter revenue, up 22% from the previous year. Net
income surged 36% to $18.34 billion, or $7.14 per share.
Capex Signals Bigger AI Bets Ahead
What is more interesting is the scale of investment in AI infrastructure. Meta raised the floor
of its 2025 capital expenditures range, now expecting to spend between $66
billion and $72 billion—up from a previous estimate that started at $64
billion. Meanwhile, Microsoft projected over $30 billion in fiscal Q1 capex and
finance leases, significantly ahead of market expectations, which hovered
around $24.2 billion.
The spending spree has wide-reaching implications. Analysts
at Citi noted that chipmakers like Advanced Micro Devices (AMD) and Broadcom
stand to gain from the increase. Microsoft accounts for about 8% of AMD’s
revenue, while Meta makes up 2% of Broadcom’s.
At Meta, the AI drive isn’t just about servers and chips.
CEO Mark Zuckerberg has ramped up hiring and recently announced a $14.3 billion
investment in Scale AI, a data-labeling startup, along with the launch of Meta
Superintelligence Labs. Morgan Stanley acknowledged the strength of Meta’s core
business but questioned the pace of its AI expansion.
Today Mark shared Meta’s vision for the future of personal superintelligence for everyone. Read his full letter here: pic.twitter.com/Hpzf77jAiG
— AI at Meta (@AIatMeta) July 30, 2025
Microsoft’s Momentum Builds on Generative AI
Barclays analysts remained upbeat about Microsoft’s
prospects, noting continued strength in data center demand and the company’s
positioning in generative AI.
Despite lingering questions about the scale and speed of
their AI investments, Meta and Microsoft made clear they have no intention of
pulling back. For chipmakers, infrastructure firms, and investors betting on
AI’s rise, that may be just what they wanted to hear.
This article was written by Jared Kirui at www.financemagnates.com.
