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Microsoft up 6.6%, Meta down 6.7%: Two ways to spend the same money Last night, Microsoft and Meta both released earnings reports; after hours, one rose 6.6%, the other fell 6.7%. The trends were completely opposite, but the market was actually asking the same question: Money has been poured into AI, when will it pay off? Microsoft’s earnings answered this question. Microsoft: Money spent, invoices returned This quarter’s revenue was $90 billion, up 18% year-over-year; net profit was $35.77 billion, up 31%. But what really impressed the market wasn’t the big numbers, it was Azure’s 43% year-over-year growth beating expectations and accelerating from last quarter’s 40%. Capital expenditure for the quarter was $41 billion, a figure that would normally draw criticism. But this time no one complained, because the investment has turned into revenue: Copilot paid seats exceeded 30 million, and commercial remaining performance obligations (RPO) reached $678 billion, up 84% year-over-year. This last figure deserves extra emphasis. An RPO of $678 billion means enterprise customers are lining up to sign contracts, and Microsoft is holding a large amount of unrecognized revenue. In other words, Microsoft’s current problem isn’t insufficient demand, but insufficient capacity. This is a completely different issue from other companies burning cash on AI. The logic is straightforward: invest in GPUs, build data centers, expand Azure capacity, then sell computing power through cloud services and Copilot. As long as Azure’s growth doesn’t slow, the market is willing to tolerate this spending. However, profits need to be examined separately. This quarter includes $3.2 billion in Anthropic investment gains; excluding that, adjusted EPS was $4.74, still beating expectations, but operational growth isn’t as impressive as the GAAP 31%. Incidentally, Microsoft is both partnering with OpenAI and investing in Anthropic, and the money bet on both fronts is already generating book returns—this spending is much smarter than some companies’ past cash burns on the metaverse. Meta: Not unprofitable, but earnings can’t keep up with spending Meta’s problem is different. Revenue was $60.8 billion, up 28%; ad impressions rose 14%, and ad prices increased 12%, so the core business is still solid. The ugly side is on the other end: total expenses rose 55%, capital expenditure was $31.08 billion, and free cash flow dropped to $784 million, down 91% year-over-year. The 6.7% drop after hours reflects this. The 14% net profit decline includes $2.4 billion in litigation fees and $1.18 billion in layoff costs; excluding these, operating profit is actually growing. So this report can’t be read as a deterioration in the ad business. What the market fears is looking ahead: 2026 capital expenditure guidance is $130-145 billion, with total expenses of $165-169 billion. In other words, cash flow pressure isn’t just a one-quarter issue, but a problem for the next year or two. The difference is: one is starting to collect rent, the other is still building the building. Microsoft and Meta are both building AI infrastructure, but at completely different stages. Microsoft can directly sell computing power to Azure customers, charge Copilot monthly, and distribute through an existing enterprise customer system. The monetization path is closed-loop. Meta still relies on advertising revenue, then funnels cash into models, data centers, AI assistants, and glasses. AI has indeed improved ad recommendation efficiency and user engagement, but there’s no clear correlation between these gains and the $30+ billion quarterly spending. The market can’t price what it can’t see, so it just punishes the stock. One often overlooked point: Zuckerberg has absolute voting control and doesn’t have to bow to quarterly earnings. This means Meta’s heavy investment will last longer than the market expects. Buying Meta is essentially buying Zuckerberg’s patience and vision. He lost a bet on the metaverse in 2022 but later saved the stock price through efficiency gains. This time’s script is similar, just with stakes several times higher. Microsoft’s premium is certainty: high Azure growth, scaled Copilot billing, orders lined up for the next generation. But certainty comes at a cost—the valuation is packed with expectations, and if Azure growth slows or capital expenditure rises, the valuation will be harshly punished. A well-known good company has very little margin for error. Meta is the opposite: the ad base is solid, this drop has released valuation pressure, but the market needs to see stabilized cash flow and clear revenue sources from AI investments before it’s willing to reprice. Until then, every earnings report risks a hit from expense guidance. So Microsoft’s rise isn’t because the market likes it spending money; Meta’s fall isn’t because the market rejects AI. The difference in one sentence: Microsoft is already collecting rent from AI, Meta is still using ads to fund AI. My own inclination: for stability and mid-to-long term, Microsoft’s logic is much smoother; for those who can tolerate volatility and believe Zuckerberg can turn AI into ad efficiency and new hardware revenue, this drop is actually a good observation point—watch cash flow, not stock price. Last earnings season, the market was counting who bought how many GPUs; this round, it’s about who first turns investment into free cash flow. Yesterday’s rise and fall was the first ballot cast at this watershed. #财报观察员：微软Meta亚马逊今夜交卷