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Shares of Meta Platforms (META) and Microsoft (MSFT) jumped by more than 6 percent and 10 percent, respectively, in early trading Thursday after both companies reported strong quarterly results that showed the artificial intelligence spending boom is far from over.
Meta said it would boost its capital spending this year as it works to build out its AI capabilities, while Microsoft’s Azure cloud business saw 33 percent revenue growth during the quarter, 16 percentage points of which it attributed to AI growth.
Investors had concerns about how the uncertainty created by new tariffs would impact the tech giants’ results and outlook. But, at least for now, the companies continue to see strong growth ahead.
Here’s what else you should know about Meta and Microsoft’s quarterly results.
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Meta Platforms posts strong first quarter amid tariff uncertainty
Meta first-quarter highlights
- Revenue reached $42.3 billion, an increase of 16 percent compared to last year’s Q1.
- Income from operations of $17.6 billion, an increase of 27 percent compared to the prior year.
- Diluted EPS of $6.43 vs. analyst estimates of $5.22.
- The company expects to spend $64 billion to $72 billion on capital expenditures in 2025, up from previous guidance of $60 billion to $65 billion.
Meta, which owns Facebook, Instagram and WhatsApp, generates nearly all of its revenue from digital advertising, which can be an easy expense for companies to pull back on during times of economic uncertainty. But the company saw strong revenue growth of 16 percent during the first quarter and said it expects growth of about 13 percent during the second quarter.
“We’ve had a strong start to the year,” Meta CEO Mark Zuckerberg said on a call with analysts. “Our community keeps growing with more than 3.4 billion people now using at least one of our apps each day. Our business is also performing very well, and I think we’re well positioned to navigate the macroeconomic uncertainty.”
The company said it would spend more to increase its investments in AI, which is transforming many aspects of its business, but also that the majority of its spending was related to its core advertising business.
“We really believe that our ability to build world-class infrastructure gives us a meaningful advantage in both developing the leading AI technology and services over the coming years,” CFO Susan Li said.
Analysts largely cheered the results, which helped to alleviate concerns about a potential slowdown in ad spending.
“We see Meta as relatively well positioned in a soft macro [environment] with multiple usage drivers and an AI-driven platform that is driving improved ad performance vs peers,” Bank of America analyst Justin Post wrote in a note to clients. Bank of America raised its price target on Meta’s stock to $690 per share, up from $640. Shares opened at $592.08 on May 1.
Microsoft shares jump on strong AI demand
Microsoft fiscal third-quarter highlights
- Revenue of $70.1 billion, an increase of 13 percent compared to last year’s quarter.
- Operating income of $32.0 billion, an increase of 16 percent compared to last year.
- Diluted EPS of $3.46 vs. analyst estimates of $3.22.
- Fiscal fourth-quarter forecast implies total revenue of $73.7 billion, ahead of estimates.
Microsoft showed strong results during its fiscal third quarter and provided an outlook that should reassure investors who were concerned about a potential slowdown. Revenue increased 13 percent, driven by strong growth in its cloud business, which was helped by robust AI demand.
“Cloud and AI are the essential inputs for every business to expand output, reduce costs, and accelerate growth,” said Microsoft CEO Satya Nadella. “From AI infra and platforms to apps, we are innovating across the stack to deliver for our customers.”
The company’s Azure and other cloud services saw revenue jump 33 percent during the quarter, and Microsoft CFO Amy Hood said the unit is expected to grow as much as 35 percent during the fiscal fourth quarter behind strength in AI.
“In our AI services, while we continue to bring data center capacity online as planned, demand is growing a bit faster,” Hood told analysts. “Therefore, we now expect to have some AI capacity constraints beyond June.”
The strong results show that investor concerns coming into the quarter may have been overdone. Microsoft’s stock was down about 6 percent so far in 2025 through Wednesday’s close.
“Demand for Azure AI services is surging, which is a long-term positive,” Morningstar analyst Dan Romanoff wrote in a note to clients following the company’s results. “While Azure remains capacity-constrained, AI performed better than internal expectations, while traditional workloads rebounded.”
Romanoff raised his fair value estimate for Microsoft shares to $505 from $490. Compare that to the opening price of $431.11 on May 1. “We view shares as attractive and the stock remains one of our top picks,” he said.
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