Meta shares dropped in extended trading on Wednesday after the company issued a weaker-than-expected revenue forecast, while Microsoft reported a jump of 18 per cent in growth to $90 billion.
For the three months ended in June, Meta anticipates revenue of between $61 billion and $64 billion. Wall Street was looking for $63.1 billion.
The company also reported a 91 per cent drop in free cashflow – $784 million in the second quarter, down from $8.55 billion reported a year earlier.
The lacklustre earnings report intensified investor concerns about the company’s spending on artificial intelligence. Meta relies on its advertising business to finance its increasingly expensive focus on AI products and infrastructure, including data centres and AI-powered glasses.
Investors have questioned how Meta will ultimately recoup its AI investments, and chief executive Mark Zuckerberg's announcement of increased projected spending to as much as $145 billion unnerved observers. Meta on Wednesday narrowed its full-year capital expenditure forecast to between $130 billion and $145 billion, slightly lifting from a previous projection of $125 billion to $145 billion.
Meta shares fell about 4 per cent in after-hours trading, after closing at $585.61.
Microsoft, meanwhile, reported robust cloud growth and a boost in the number of paid AI subscribers, as investors remain fixated on whether the tech giant’s data centre spending will pay off.
Net income increased 31 per cent to $35.8 billion, beating Wall Street’s expectations, according to an average of dozens of analysts polled by FactSet.
Revenue at the company's Azure cloud-computing business rose 43 per cent in its fiscal fourth quarter, its fastest rate in four years, beating analyst estimates.
Shares of Microsoft were up about 3 per cent in extended trading.
"This year, Azure revenue surpassed $100 billion for the first time, and Microsoft 365 Copilot reached over 30 million paid seats, reflecting the confidence customers are placing in us to power their AI transformation," chief executive Satya Nadella said.
Meanwhile, Qualcomm reported a significant decline in handset revenue as the company continues to diversify its end markets, according to SeekingAlpha.
Shares dropped 5 per cent in after-market trading.
The San Diego-based company reported adjusted earnings a share of $2.21, compared with the consensus estimate of $2.22.
Revenue for the third quarter declined 4 per cent year over year to $9.95 billion, which was more than the $9.67 billion estimates.
Wall Street ended sharply lower after the Federal Reserve held interest rates steady and AI-related chip stocks added to recent declines. The Fed's decision to leave the benchmark interest rate in the 3.50 per cent to 3.75 per cent range drew dissents from three of the 12 members of the policy-setting Federal Open Market Committee who "preferred" a quarter-percentage-point rise at the meeting.
