{"slug": "meta-and-microsoft-s-ai-spending-a-tale-of-two-earnings-reports", "title": "Meta and Microsoft's AI spending: a tale of two earnings reports", "summary": "Meta's Q2 earnings report showed AI spending nearly doubled to $31.1 billion, eating up free cash flow that plunged from $8.55 billion to $784 million, and investors responded by sending the stock down nearly 10% in after-hours trading. In contrast, Microsoft's AI budget forecast remained unchanged, and its stock jumped almost 8% after hours, highlighting investor preference for AI spending with measurable returns.", "body_md": "**Meta's message to investors: The AI spending will continue until returns improve.**\n\n**Investors' response: No thanks.**\n\nAI spend was the big focus [ during Meta's Q2 earnings report](https://www.businessinsider.com/meta-q2-earnings-report-ai-capex-spending-stock-2026-7). And the pitch wasn't convincing enough to stop an after-hours selloff.\n\nMeta was happy to credit AI with helping its advertising business (its bread and butter) rise 27%. And it wasn't just pure growth. Ad impressions grew 14%, while the average price per ad climbed 12%.\n\nThere's just one catch. Meta is still spending an incredible amount — $31.1 billion, roughly double what it spent last year — on its AI bets. That's eating up [ a significant portion of its free cash flow](https://www.businessinsider.com/meta-q2-2026-earnings-free-cash-flow-plunges-ai-investment-2026-7), which went from $8.55 BILLION to $784 MILLION. One analyst said the AI strategy is like \"\n\n[.\"](https://www.businessinsider.com/meta-q2-2026-earnings-analyst-ai-strategy-throwing-spaghetti-2026-7)\n\n__throwing spaghetti at the wall__Investors were unimpressed, with Meta's stock falling nearly 10% at one point after the bell.\n\nCompare that to another tech giant that reported yesterday: Microsoft. It logged wins in Azure and Microsoft 365 Copilot, which Microsoft CFO Amy Hood touted in her [ quarterly memo to employees](https://www.businessinsider.com/microsoft-internal-memo-tells-employees-azure-and-copilot-made-progress-2026-7) viewed by BI's Ashley Stewart. Perhaps more importantly,\n\n[.](https://www.businessinsider.com/microsoft-ai-capex-unchanged-data-centers-spending-tech-giants-2026-7)\n\n__its AI budget forecast didn't budge__Investors noticed. Microsoft's stock jumped almost 8% in after-hours trading.\n\nThe difference between the two is clear: AI spending is fine … as long as there is a direct and measurable return.\n\n**CEO Mark Zuckerberg made the case for why Meta's AI bets might need more time.**\n\nA lot of the most immediate use cases for AI [ are for developers](https://www.businessinsider.com/category/the-great-coding-reset). Just look at the boom in vibe coding. \"Building for consumers is a little bit different,\" Zuckerberg said during Wednesday's earnings call, but it's also a \"massive market opportunity.\"\n\nAnd who better to serve that market than the king of all social networks? Between Facebook, Instagram, WhatsApp, and Threads, Meta has billions of users across its platforms. Zuckerberg said Meta's making a big bet on AI agents.\n\nThat all tracks with one small exception: A lot of Americans are *really* nervous about AI.\n\nMeta has tried to ease those fears with a big AI PR push, including a Zuckerberg op-ed and some interviews with reporters. (The request to speak to BI Today must have got caught in my spam inbox. I'm happy to chat, Mark. Sounds like you have [ a really cool gym](https://www.businessinsider.com/review-mark-zuckerbergs-elite-home-gym-what-to-buy-skip-2026-7).)\n\nBI's Peter Kafka has an idea about how Meta could better convince people to get on board with AI. ([ Hint: It's green](https://www.businessinsider.com/mark-zuckerberg-meta-ai-pr-campaign-cash-payments-2026-7).)\n\nWhatever the plan is, Meta had better figure something out fast. Investors are running out of patience.", "url": "https://wpnews.pro/news/meta-and-microsoft-s-ai-spending-a-tale-of-two-earnings-reports", "canonical_source": "https://www.businessinsider.com/meta-microsoft-ai-spending-tale-of-two-earnings-reports-2026-7", "published_at": "2026-07-30 12:19:40+00:00", "updated_at": "2026-07-30 12:29:41.762102+00:00", "lang": "en", "topics": ["artificial-intelligence", "ai-policy", "ai-products"], "entities": ["Meta", "Microsoft", "Mark Zuckerberg", "Amy Hood", "Azure", "Microsoft 365 Copilot", "Facebook", "Instagram"], "alternates": {"html": "https://wpnews.pro/news/meta-and-microsoft-s-ai-spending-a-tale-of-two-earnings-reports", "markdown": "https://wpnews.pro/news/meta-and-microsoft-s-ai-spending-a-tale-of-two-earnings-reports.md", "text": "https://wpnews.pro/news/meta-and-microsoft-s-ai-spending-a-tale-of-two-earnings-reports.txt", "jsonld": "https://wpnews.pro/news/meta-and-microsoft-s-ai-spending-a-tale-of-two-earnings-reports.jsonld"}}