Same night: Microsoft was up 10%, while Meta crashed 8%—AI stories start to split
After the U.S. stock market closed last night, two earnings calls played out at the same time.
One was up 10%, and the other was down 8%.
Both talked about AI, yet the market voted with their feet in two completely different ways.
First, Microsoft—fanfic plot.
Revenue came in at $90 billion, up 18% year over year, and beat expectations. Net profit was $35.77 billion, up a whopping 31% year over year.
The most important figure: Azure cloud business revenue grew 43% year over year, the fastest pace since early 2022. For the full year, revenue first broke $100 billion, making Microsoft the second cloud service provider after AWS to reach that milestone.
Paid users for M365 Copilot surpassed 30 million, adding 10 million net in a single quarter. More than 300k enterprise customers purchased Copilot.
What excited the market even more: the company lowered its FY2027 capital expenditure guidance from $190 billion to $175 billion. After-hours shares jumped straight up 10%.
Microsoft is telling the market: the AI money I invested is finally starting to come back.
Now Meta—ouch plot.
Revenue was $60.8 billion, up 28% year over year, slightly above expectations. Advertising revenue was $59.36 billion, up 27% year over year.
Then the storyline suddenly flipped.
Net profit was $15.85 billion, down 14% year over year. Costs and expenses rose 55% year over year. EPS was $6.18, versus market expectations of $7.22—off by exactly $1.
The most eye-catching data: free cash flow was left with just $784 million. Compared with $8.55 billion in the same period last year—down 91%.
Put it this way: a $1.5 trillion behemoth, busy for a quarter, ends up with only more than $700 million in cash. It’s like you claim you’re worth $10k—then you empty your pockets and only have $5 left. It’s not that you don’t have enough assets; it’s that everything is tied up in houses and cars.
The lower end of capital expenditure guidance was raised from $125 billion to $130 billion. The midpoint of third-quarter revenue guidance was $62.5 billion, below analysts’ expected $63.2 billion.
Meta is telling the market: I’m still burning money—don’t催 me.
After-hours shares plunged by more than 8%.
So the question is—why?
Same AI track, same spending on building data centers and buying GPUs—why are the outcomes so drastically different?
The root cause is the business model.
Microsoft’s AI is built on a value chain that’s already proven.
Azure cloud services already have enterprise customers lined up for compute capacity. As soon as the new GPUs come online, they can be turned into Azure revenue immediately. Copilot has more than 300k enterprise customers paying. In the future, there will be $678b in order backlog, up $50b quarter over quarter.
Input—capacity—revenue—cash flow: this closed loop is already running.
What about Meta’s AI?
Zuckerberg said on the call that compute is mainly used to train models, improve ad recommendations, and develop agents.
In plain English: AI helps me optimize my existing business, but it hasn’t become an independent, measurable new revenue source yet.
Ads really are more precise, but that gain is completely swallowed by costs and expenses that surged 55%. Spending is increasing, but the returns aren’t clear.
One is AI making money, and the other is AI burning money. The difference is that big.
What does this mean for crypto?
The split in the AI narrative is only just beginning.
Last week, Tesla and Google both crashed due to cash-flow anxiety. This week, Microsoft proved AI can make money, and Meta proved AI can also burn money and still keep running.
The market no longer buys into “who is burning cash”—it only rewards “who can make the money back.”
Tonight, Amazon and Apple will deliver their reports next.
Amazon’s AWS is the core player in AI cloud services. Revenue is expected to be $40.5 billion, up 31%. But over the past 12 months, free cash flow has already plunged from $25.9 billion to $1.2 billion.
What about Apple? iPhone revenue is expected to be $53.5 billion, up 20%. Whether AI features can drive an upgrade cycle is the biggest variable.
Next comes this: who is truly making money, and who is only drawing up a promise.
My take—
Microsoft’s AI story can be trusted. Because it has a mature vehicle—cloud services. AI is the icing on the cake, not something cooked up out of thin air.
Meta’s AI story—let’s look again. It’s not that they aren’t investing; it’s just that no one can clearly say when the money being spent will turn into independent revenue.
After three years of an AI arms race, the market has finally stopped being satisfied with “whoever spends more money is the winner.”
From “AI faith” to “AI cash flow”—this switch is only just starting.
Tonight’s answers from Amazon and Apple will be the next chapter in this story.
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