Two tech giants at the forefront of the artificial intelligence buildout reported quarterly earnings after the market closed on Wednesday, and the response from Wall Street analysts was a study in contrasts. For Meta, which missed on earnings-per-share and increased the lower bound of its capital spending forecast, the reception from analysts on the earnings call was measured, with some whiffs of outright frustration about when exactly AI investments would start paying off in a big way. Asking about consumer adoption of AI, Mark Shmulik at Bernstein referred to AI as a “glorified search tool” and asked Meta CEO Mark Zuckerberg when the technology was going to meaningfully drive new consumer behaviors. “Are we on the cusp of something kind of breaking through, or do we just need to be a bit more patient?” he said. Goldman Sachs analyst Eric Sheridan expressed a similar urgency about when and in which of Meta’s product lines the returns on AI investment would start to materialize in force. “As you look at … the state of the current offerings [and] the compute capacity, which of them do you expect to be able to scale first – in ’26 and ’27 – to showcase quantifiable, material [return on invested capital] to investors?” he asked. META 1D mountain Meta, 1 day For Microsoft, which saw a revenue surge in its cloud computing platform Azure while coming in under Wall Street’s capital expenditure forecast, analysts mostly doffed their caps. Brent Thill at Jefferies called the Azure revenue growth “impressive” while Mark Moerdler at Bernstein and Adam Wood at Morgan Stanley offered straightforward “congratulations” on the quarter. The differentiating factor for analysts was clearly the sign that AI investments were starting to produce undeniable returns in Microsoft’s case while they’re still searching for a dominant foothold in the case of Meta. MSFT 1D mountain Microsoft, 1 day Zuckerberg, who raised eyebrows on Wall Street earlier in July after announcing that his company could start renting out its excess computing capacity, repeatedly stressed the flexibility and multifacetedness of Meta’s business model during the call. He also talked about using computing capacity to develop a “different muscle” in the company’s enterprise segment apart from its core advertising business, as well as developing tools for its own internal processes. Analysts sounded less than convinced about Meta’s computing plans and pointed out that if the company starts leasing out its servers as announced, it will be both a seller and a purchaser of computing capacity. “Mark, just in terms of the number of offers to monetize your compute externally, you also at the same time are purchasing capacity from a number of third parties. I just hope you can help us understand some of the differences here,” Douglas Anmuth at JPMorgan asked on Wednesday evening’s call. Meta delivered earnings-per-share of $6.18 compared to an expected $7.22 (per LSEG) while raising the low end of its full-year 2026 capex range to $130 to $145 billion, up from $125 to $145 billion. The stock dropped 7% immediately following the earnings release. Microsoft reported Azure cloud growth of 43% and an unchanged capex forecast, with share climbing 7% after the earnings report.
