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Earnings season is quickly becoming Capex Season for megacap tech giants, with Microsoft and Meta Platforms set to report their quarterly results amid skyrocketing investment in artificial intelligence—to the tune of a combined $70 billion this fiscal year.
As the AI arms race intensifies, the focus of investors is shifting away from traditional profit metrics and turning toward capital expenditure trends, particularly as both companies chase dominance in the future of computing. Microsoft and Meta, each riding rallies of over 40% since April, now face the critical question: Can AI spending deliver real returns fast enough to justify the surge?
Microsoft is expected to report $18 billion in capital spending for the quarter ended June 30—a 30% increase year-on-year—while sales are forecast to grow by 14%. Meta is set to spend $16.4 billion, double from the same period last year, with revenue expected to rise 15%.
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Analysts suggest these outlays could be more impactful to share prices than the earnings themselves. “We’re no longer at the point where companies get a pass on future AI potential,” said Gabriela Santos, chief strategist at JPMorgan Asset Management. “Valuation is back in focus—especially if revenue growth can’t keep pace with AI spending.”
Last week, Alphabet lifted its capital expenditure forecast by 13% to $85 billion, fuelling a stock rebound that erased its 2025 losses. That has set a high bar for Microsoft and Meta, whose 2025 stock gains already far outpace Google’s 3.4%.
While Alphabet’s AI efforts are built into its search business, Microsoft and Meta are following divergent strategies. Microsoft has doubled down on its OpenAI partnership, Azure cloud infrastructure, and its AI-powered assistant, Copilot. Meta is pursuing “super intelligence” through massive in-house engineering investment.
“Microsoft’s AI strategy appears less risky, given its deep integration into cloud services and software,” said Krishna Chintalapalli, tech sector lead at Parnassus Investments. “Azure and Copilot are real, revenue-generating assets, not moonshots.”
Meta’s approach, however, is also starting to show value. Its AI is improving ad targeting, boosting user engagement, and laying the foundation for new product categories like smart glasses. For investors, that’s a far cry from past bets like the $20 billion Reality Labs gamble, which many viewed as overreach.
“This time, the AI spending has clearer monetisation paths,” said Michael McKinnon, who oversees over $40 billion at Artisan Partners. “It’s not just speculative R&D—it’s performance-orientated innovation.”
Despite the massive spending, options markets suggest investors are bracing for moderate volatility after the reports: implied moves are 3.9% for Microsoft and 5.8% for Meta. With P/E ratios near or above long-term averages, both firms are under pressure to prove that AI capex isn’t just hype.
“Historically, high or rising capex has been seen as a negative,” said Tony DeSpirito of BlackRock. “But when a company is extremely profitable, as these are, investment becomes a strength, not a liability. That’s why Big Tech is playing by different rules.”
Microsoft and Meta’s AI capex plans are reshaping how Wall Street values innovation. With a combined $70 billion on the table and investor optimism already baked into share prices, delivery on AI’s promise is no longer optional—it’s mission-critical.
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