NEW YORK (Realist English). Artificial intelligence has split the fortunes of two tech giants. Meta Platforms shares tumbled 10% after second‑quarter earnings showed the company’s free cash flow collapsed 91% – from $8.55 billion a year ago to just $784 million.
Meta’s market capitalisation lost more than $100 billion. Microsoft, by contrast, reported record data centre lease deals worth over $130 billion, and its shares rose 4.4% in after‑hours trading.
Meta: $145 billion on AI with little return
The main reason for the plunge is massive spending on AI infrastructure. Meta raised the lower end of its 2026 capital expenditure forecast to $130–145 billion. Just three months ago, the company planned to spend $125 billion. Expenses and operating costs in Q2 rose 55% – to $42 billion.
Revenue, meanwhile, grew 28% – to $60.8 billion. Profit fell 14%. The Q3 forecast ($61–64 billion) missed Wall Street expectations ($63.1 billion). Earnings per share came in at $6.18 versus the projected $7.22.
“Meta’s AI spending was easy to applaud when margins were growing. Now it’s harder to cheer when the costs are already visible in the numbers,” said Mike Proulx of Forrester Research.
Zuckerberg defends future ‘agents’
Meta CEO Mark Zuckerberg tried to convince investors that the strategy is sound. He said AI investments are “accelerating every part of the core business” and that personalised AI agents capable of working around the clock for users will become “the foundation of the next wave of products and new revenue streams.”
“Soon we’ll have agents that can work 24/7 on your behalf,” Zuckerberg promised. However, he admitted that this concept “has not yet become a reality.”
Analysts remain sceptical. According to Mindy Smiley of EMARKETER, “these continuous launches increasingly resemble attempts to guess what will work rather than coalescing around a sustainable path forward.”
Zuckerberg, however, reminded that Meta has always been a “full‑stack technology company.” As evidence, he said that after adding the Muse Spark model, daily interactions with the AI assistant rose 60%, and 9 million small businesses are using AI tools to create images.
Microsoft: $130 billion in leases and 4.4% growth
A very different picture at Microsoft. In its fourth fiscal quarter, the company signed new data centre lease deals worth more than $130 billion. Total future lease commitments reached $329.1 billion, up from $196.6 billion in the previous quarter – the largest quarterly jump in data centre leasing in the company’s history.
Microsoft CEO Satya Nadella said the company plans to double data centre capacity within two years. In the quarter, 31 new data centres were brought online, and 88 over the fiscal year. Capital expenditure in Q2 rose 70% year‑on‑year – to $41 billion.
Markets reacted positively: Microsoft shares gained 4.4% in after‑hours trading. Revenue grew 18% year‑on‑year – to $90 billion. The intelligent cloud segment (Azure) grew 32% – to $39.3 billion. Net profit increased 31% – to $35.8 billion.
“All capital expenditure investments are delivering significant returns. The business is accelerating,” said Melissa Otto of Visible Alpha.
Meta vs Microsoft: the price of strategy
The contrast between the two companies is stark. Meta spends comparable amounts ($130–145 billion annually) primarily on its own models and products.
Microsoft is also ramping up spending, but it directly converts into cloud revenue growth. OpenAI, in which Microsoft holds a quarter stake, generated $24.1 billion in revenue for the company over the past year – about 7% of Microsoft’s total sales.
Microsoft’s free cash flow fell 23% – to $19.6 billion – but that pales in comparison to Meta’s 91% crash.
“Meta views AI infrastructure as a strategic asset, but the bills are coming faster than the returns,” summed up Mike Proulx of Forrester.
Meta continues to double down: the company plans to increase total computing capacity to 7 GW this year and 14 GW next year. Meta shares have lost 11% since the start of the year.
Meanwhile, Meta is in early talks to lease computing capacity to AI lab Anthropic in a deal worth up to $10 billion, trying to enter a market dominated by Amazon and Google.
Artificial intelligence remains the biggest bet for tech giants. But for now, for Meta it is a bet that frightens investors, while for Microsoft it is an investment that is already paying dividends.
