Microsoft Soared 15%. Meta Sank 8%. Same Week, Same AI Bet

Keypoints:

• • Microsoft's Azure growth accelerated to 43%, pushing full-year cloud revenue past $100 billion for the first time
  • Copilot's paid seat count more than doubled sequentially, crossing 30 million
  • Microsoft shares jumped 15% on the report
  • Meta missed its own revenue guidance for the current quarter and fell nearly 8%
  • Microsoft booked a $3.2 billion gain from its Anthropic stake that boosted earnings per share

Two of the world's biggest AI companies reported earnings just days apart this week. Both have spent billions building AI infrastructure, both have promised those investments will pay off, and both have argued that the long game matters more than the short-term cost. Wall Street agreed with one of them and punished the other.

Microsoft made the stronger case.

The company's cloud business, Azure, accelerated to 43% growth, up from 40% the previous quarter, while annual cloud revenue crossed $100 billion for the first time in the company's history. 

AI adoption kept moving in the same direction. Paid Copilot subscriptions climbed past 30 million, more than doubling from just over 20 million reported in April. CEO Satya Nadella also highlighted another milestone during the earnings call - Microsoft's contracted commercial backlog grew by $51 billion in a single quarter, suggesting customers are continuing to commit to long-term AI spending.

There was another boost hiding inside the results. Microsoft recorded a $3.2 billion accounting gain tied to its investment in AI startup Anthropic, adding about 33 cents to earnings per share. The company still beat analysts' expectations by roughly 50 cents, meaning most of the upside came from the underlying business rather than that one-off gain. 

Perhaps even more important for investors, operating margins held steady at around 45%, easing concerns that Microsoft's enormous AI infrastructure investments were quietly eroding profitability. Investors liked what they saw. The stock surged 15%, one of Microsoft's biggest single-day gains in years.

But Meta told a different story.

The company projected $61 billion to $64 billion in revenue for the current quarter, falling short of what analysts had been expecting. That guidance overshadowed an otherwise solid quarter and immediately shifted the market's attention back to the cost of Meta's AI ambitions. Shares dropped nearly 8% following the announcement.

The contrast couldn't have been much clearer. Both companies continue pouring money into AI, but investors no longer seem willing to reward spending alone. Microsoft's results offered tangible evidence that its AI investments are already translating into faster cloud growth, rising customer commitments, and stable profitability. Meta's outlook left more questions than answers. The message from Wall Street this week was simple: AI spending still matters, but proof of returns matters much more.