Meta Platforms and Microsoft diverge on AI profitability as Big Tech capex soars past $600B

Two of the largest companies on Earth just reported earnings within hours of each other, and the market’s reaction could not have been more different. Microsoft posted roughly $90 billion in quarterly revenue, an 18% year-over-year jump, and was rewarded with an 8% stock price surge. Meta reported $60.8 billion in revenue, a faster 28% growth rate, and got punished with a 10% decline. The numbers behind the divergence Microsoft’s Q2 2026 results were powered largely by Azure, the company’s cloud computing division. Its AI business within Azure hit a $37 billion annual run rate, up 123% year-over-year. Meta told a different story. While its top line grew faster than Microsoft’s in percentage terms, profits fell 14% to $15.85 billion. The culprit was infrastructure spending, with Meta’s estimated 2026 capital expenditure landing somewhere between $115 billion and $135 billion, potentially even higher. The capex arms race is just getting started Projected AI-related capital expenditures across major tech companies are expected to reach $635 billion to $665 billion in 2026, up from approximately $381 billion in 2025. That’s roughly a 70% increase in a single year. Microsoft is channeli...