Meta becomes one of Microsoft’s largest AI customers

Meta and Microsoft are locked in one of tech’s most fascinating relationships: fierce AI competitors by day, major business partners by the numbers. The arrangement traces back to May 2022, when Meta selected Microsoft Azure as its strategic cloud provider. That deal gave Meta access to Azure NDm A100 v4 virtual machines, powered by roughly 5,400 GPUs, for large-scale AI research workloads. The spending arms race Both companies reported quarterly results on July 29, and the contrast was striking. Microsoft posted a 70% increase in quarterly capital expenditure to $41 billion, largely to meet surging demand for cloud and AI services. The market rewarded that spending: Microsoft’s stock climbed on evidence that Azure was successfully converting AI hype into actual revenue. Meta told a different story. The company reported Q2 revenue of $60.8 billion, a solid 28% year-over-year increase. But profit fell 14%, and free cash flow collapsed 91% to just $784 million. Meta raised its 2026 capex guidance to between $130 billion and $145 billion, a figure that dwarfs previous estimates. Frenemies with benefits Meta uses Azure for AI research workloads, which means it’s effectively paying a co...