Wall Street delivered mixed verdicts... MS surges 15%, Meta plunges 9%

[Financial News, New York = Reporter Lee Byung-chul]  As the results of AI investments began to show up in corporate earnings, the fortunes of U.S. big tech companies diverged sharply. Microsoft (MS) saw its stock jump 17% after proving it could monetize AI services, while Meta Platforms fell more than 9% as its earnings and forward revenue outlook both missed market expectations and free cash flow (FCF) plunged. The market appears to be shifting its focus from the size of AI investments to the returns they generate.
On the 30th local time, Microsoft reported fiscal 2026 fourth-quarter results released the previous day, with both revenue and growth in Azure, its core cloud business, beating market forecasts. Azure revenue rose 43% from a year earlier, exceeding expectations.
Paid accounts for Microsoft 365 Copilot, the company's AI-powered work assistant service, also topped 30 million. That is an increase of more than 10 million in just a few months after Microsoft said in April that the figure had surpassed 20 million. The market took this as confirmation that AI services are translating into real revenue and profit.
Tracy Wu, senior analyst at Forrester, told CNBC, "Strong revenue growth and the spread of Copilot are signs that the $190 billion data center investment is beginning to pay off."
Even as the market worried about the cost of AI spending, Microsoft kept its capital expenditure (CapEx) plan for this year unchanged and hinted at the possibility of further investment in fiscal 2027. Investors took that as a sign of growth rather than a burden, and the stock posted its biggest gain since March 2020, at the start of the COVID-19 pandemic.
Meta, by contrast, received a very different verdict.
Meta missed market expectations for both earnings per share (EPS) this quarter and revenue guidance for next quarter. The company projected revenue of $61 billion to $64 billion for the current quarter, with a midpoint of $62.5 billion, below the market forecast of $63.15 billion.
The burden of expanding AI investment was also reflected in the results. Meta's free cash flow fell 91% from a year earlier to $784 million.
Investors were more concerned about the near-term hit to profitability than about the expansion of AI spending, and Meta's stock plunged more than 9% on the day. The weakness was so severe that the stock was on track for 11 straight sessions of declines, with losses over that period exceeding 20%.
This earnings season showed that what matters most is not AI investment itself, but how quickly companies can turn those investments into revenue and cash flow.



[email protected] Reporter Lee Byung-chul Reporter