Wall Street awaits Meta and Microsoft’s financial results. Focus on capital expenditure
As well as scrutinising the financial results and the outlook, the market will be putting capital expenditure on AI under the microscope
On Wall Street, the wait for the quarterly results from Meta Platforms and Microsoft – due to be released today, 29 July, after the markets close – is drawing to a close. The two tech giants are among the key players in the earnings season and, once again, investors’ attention will extend far beyond the quarterly figures.
The consensus points to solid results for both companies. However, what may really determine investors’ reaction will be the outlook for the future: growth in the artificial intelligence (AI) sector, trends in demand and, above all, the scale of the major investments being made to support AI.
Analysts are forecasting revenue of around $60.2 billion for Meta, with earnings per share of between $7.13 and $7.19. These figures are expected to be driven by the continued growth in advertising revenue on Facebook and Instagram, and by the increasing contribution from the artificial intelligence tools used by advertisers.
As for Microsoft, however, Wall Street estimates point to revenue of around 87.6 billion and earnings per share of $4.24, representing double-digit growth compared with the same period last year. The focus will be primarily on the Azure cloud division, considered the main driver of the group’s growth, and on the adoption of artificial intelligence-based services, such as Microsoft 365 Copilot. Analysts are keen to understand whether the strong demand for AI will continue to justify the huge investments the company is making to increase the capacity of its data centres.
Yes, the huge investments. The common thread running through the Big Tech companies’ quarterly results remains the same: massive capital expenditure on artificial intelligence. Over the past two years, Meta, Microsoft and the other major players in the sector have announced unprecedented spending plans to build data centres, purchase chips and develop the infrastructure required for AI models. These investments are seen as strategic for maintaining technological leadership, but they are also fuelling investors’ doubts. The question is simple: when will these billions start to yield commensurate financial returns? Many analysts fear that investment growth is outpacing revenue growth.
