Meta plunges 9%, Microsoft surges 8% as AI trade splits Big Tech

Microsoft shares surged 8% in extended trading on July 29, 2026, while Meta shares fell 9% after the two tech giants reported quarterly earnings that painted contrasting pictures of their artificial intelligence investments. The split reaction highlights how Wall Street is rewarding immediate returns from AI while punishing heavy spending without clear near-term payoffs.

Microsoft’s fiscal fourth-quarter revenue beat analyst estimates, and its Azure cloud business grew 43%, exceeding market expectations. The company also disclosed that paid seats for Microsoft 365 Copilot, its AI work assistant, surpassed 30 million, up from more than 20 million in April. Tracy Woo, principal analyst at Forrester, said in a note that the strong revenue and accelerating Copilot adoption signal that Microsoft’s $190 billion data-center buildout is beginning to deliver returns.

The upbeat results overshadowed Microsoft’s reaffirmed 2026 capital expenditure forecast and a signal of potential spending expansion in fiscal 2027, at a time when investors are jittery over AI costs. The stock’s after-hours gain on July 29 trimmed its year-to-date decline to around 24%.

Meta, by contrast, missed earnings expectations and issued weaker-than-expected revenue guidance for the current quarter. The company forecast revenue of $61 billion to $64 billion, with a midpoint of $62.5 billion, below the $63.15 billion analysts polled by LSEG had anticipated. Meanwhile, Meta’s free cash flow plunged 91% year-on-year to $784 million as it continued to pour money into AI infrastructure.

Meta CEO Mark Zuckerberg said the company is “getting a lot of offers for compute at a significant premium” over what it paid, hinting at a possible business leasing excess computing capacity to third parties. However, he acknowledged Meta must retain compute resources for its own product development, and Ben Barringer, head of technology research at Quilter Cheviot, noted in a note on July 30 that the narrative “is a little light on detail and relying on what could be done in the future.” Barringer added that Meta is still finding its way in AI, causing both costs and revenues to look volatile.

Meta shares slid in extended trading on July 29 and are down around 16% this year. The diverging fortunes of the two Big Tech names underscore a growing divide in the AI trade, with investors favoring companies that can demonstrate tangible returns over those with ambitious but uncertain spending plans.