# Meta Drops 9% While Microsoft Surges 9% as AI Earnings Split Big Tech > Source: > Published: 2026-07-30 11:52:36.674093+00:00 # Meta Drops 9% While Microsoft Surges 9% as AI Earnings Split Big Tech - Meta shares fell roughly 9% after Q2 earnings per share of $6.18 missed the $7.14 consensus, dragged down by $3.6 billion in legal and severance charges and a 91% decline in free cash flow [[1]](https://finance.yahoo.com/news/meta-misses-on-q2-earnings-stock-tumbles-121325403.html) - Microsoft jumped 9% after reporting fiscal Q4 revenue of $90 billion, 43% Azure growth, and an AI business run rate of $37 billion — up 123% year-over-year [[2]](https://www.geekwire.com/2026/microsoft-tops-wall-street-expectations-reports-accelerating-azure-growth-and-37b-ai-run-rate/) - Meta raised its full-year 2026 capex guidance to $135-$145 billion while Microsoft disclosed plans for $175 billion in fiscal 2027 capital spending [[1]](https://finance.yahoo.com/news/meta-misses-on-q2-earnings-stock-tumbles-121325403.html)[[3]](https://finance.yahoo.com/markets/stocks/articles/microsoft-corp-msft-q4-2026-050436699.html) - Microsoft reported 30 million paid Copilot seats, up from 20 million in April, with net seat additions more than doubling quarter-over-quarter [[2]](https://www.geekwire.com/2026/microsoft-tops-wall-street-expectations-reports-accelerating-azure-growth-and-37b-ai-run-rate/) - The combined swing of nearly 18 percentage points between the two stocks marks the widest single-day Big Tech earnings divergence of 2026 [[4]](https://www.cnbc.com/2026/07/30/microsoft-msft-meta-stock-today-earnings.html) Meta Platforms and Microsoft reported quarterly earnings minutes apart on Tuesday evening and produced starkly opposite market reactions, crystallizing the divide in how investors are pricing the AI capital expenditure cycle. Meta shares dropped roughly 9% in premarket trading on Wednesday, while Microsoft surged 9%, a combined swing of nearly 18 percentage points that marks the widest single-day Big Tech earnings divergence this year [4]. Meta posted Q2 revenue of $60.8 billion, up 28% year-over-year and slightly above the $60.2 billion consensus, but diluted earnings per share of $6.18 fell well short of the $7.14 Wall Street expected [1]. The miss was driven by $2.4 billion in legal contingencies and $1.2 billion in severance costs, which helped push free cash flow down 91% to just $784 million from $8.55 billion a year earlier . [[5]](https://abcnews.com/Business/wireStory/meta-shares-drop-q2-profit-declines-due-legal-135206558)Microsoft, reporting its fiscal fourth quarter, delivered revenue of $90 billion — up 18% — and adjusted EPS of $4.74, both ahead of estimates [3]. Azure revenue grew 43% in the quarter, the company's AI business reached a $37 billion annual run rate (up 123%), and Microsoft 365 Copilot hit 30 million paid seats . [[2]](https://www.geekwire.com/2026/microsoft-tops-wall-street-expectations-reports-accelerating-azure-growth-and-37b-ai-run-rate/)## Meta: Revenue Beat, Everything Else Missed Meta's top line was not the problem. Advertising revenue of $59.3 billion topped the $59.07 billion consensus, with ad impressions across the Family of Apps rising 14% and average price per ad climbing 12% year-over-year [1]. CEO Mark Zuckerberg said on the call that 'AI is accelerating our core business today, powering our next generation of products, and opening the door to entirely new enterprise opportunities' . [[5]](https://abcnews.com/Business/wireStory/meta-shares-drop-q2-profit-declines-due-legal-135206558)But costs surged. Operating expenses jumped 55% to $42 billion, and net income fell 14% to $15.85 billion [5]. The company raised the lower end of its full-year 2026 capital expenditure guidance to $135-$145 billion, up from $125-$145 billion previously, further pressuring cash generation . Meta also announced a $14 billion data center partnership with BlackRock in Texas, with BlackRock taking an 80% stake [[1]](https://finance.yahoo.com/news/meta-misses-on-q2-earnings-stock-tumbles-121325403.html). [[1]](https://finance.yahoo.com/news/meta-misses-on-q2-earnings-stock-tumbles-121325403.html)Forward guidance underwhelmed: Meta projected Q3 revenue of $61-$64 billion, with the midpoint falling below the $63.1 billion analysts expected [1]. The company also flagged a higher effective tax rate for the remainder of 2026. ## Microsoft: Azure Acceleration and Copilot Momentum Microsoft's results told the opposite story of AI investment beginning to pay off. Full-year revenue surpassed $331 billion, up 18%, with operating income exceeding $155 billion, up 21% [3]. Azure's 43% quarterly growth accelerated from prior quarters, and the full-year Azure business crossed $100 billion in revenue for the first time . [[3]](https://finance.yahoo.com/markets/stocks/articles/microsoft-corp-msft-q4-2026-050436699.html)The AI commercialization metrics stood out. Microsoft 365 Copilot reached 30 million paid seats, up from 20 million as of April, with net seat additions more than doubling quarter-over-quarter [2]. Commercial remaining performance obligations hit $678 billion, up 84%, providing deep forward visibility . [[3]](https://finance.yahoo.com/markets/stocks/articles/microsoft-corp-msft-q4-2026-050436699.html)CFO Amy Hood projected Azure growth to accelerate further in the first half of fiscal 2027 and guided for roughly $175 billion in fiscal 2027 capital expenditures. Operating cash flow rose 30% to $55.4 billion for the quarter [3]. ## The AI Capex Divide Both companies are spending at historic levels on AI infrastructure, but the market is drawing a sharp distinction between those translating spending into measurable revenue and those still in the investment phase. Microsoft's AI business — at $37 billion in annual run rate — gives investors a concrete revenue line to track against its capital outlays [2]. Meta's AI monetization remains embedded in advertising improvements, making it harder for analysts to isolate returns. 'Microsoft's strong revenue performance, combined with accelerating Copilot adoption, signals that its $190 billion data-center buildout is beginning to deliver returns,' Forrester principal analyst Tracy Woo said [4]. Meta's free cash flow compression to $784 million — from $8.55 billion a year ago — tells the opposite story, at least for now . [[5]](https://abcnews.com/Business/wireStory/meta-shares-drop-q2-profit-declines-due-legal-135206558)Microsoft also disclosed it extended data center useful life assumptions from 15 to 25 years, a significant accounting change that affects depreciation schedules going forward [3]. ## What's Next The divergence sets up a critical week for Big Tech earnings. Apple and Amazon report results on Thursday, and both face similar investor scrutiny over whether AI spending is generating proportional returns. Microsoft guided for continued Azure acceleration, while Meta's Q3 revenue outlook suggests the pace of advertising growth may be plateauing even as costs continue to climb. For the broader market, the Meta-Microsoft split reinforces a new sorting mechanism: investors are no longer rewarding AI spending in aggregate but demanding visible monetization. With combined 2026-2027 capex plans between these two companies alone exceeding $300 billion, the stakes of that distinction are enormous. ## Companies mentioned ## Further sources [[1] Yahoo Finance — Meta misses on Q2 earnings, stock tumbles ↗](https://finance.yahoo.com/news/meta-misses-on-q2-earnings-stock-tumbles-121325403.html) [[2] GeekWire — Microsoft tops Wall Street expectations, reports accelerating Azure … ↗](https://www.geekwire.com/2026/microsoft-tops-wall-street-expectations-reports-accelerating-azure-growth-and-37b-ai-run-rate/) [[3] Yahoo Finance — Microsoft Corp (MSFT) Q4 2026 Earnings Call Highlights: Record … ↗](https://finance.yahoo.com/markets/stocks/articles/microsoft-corp-msft-q4-2026-050436699.html) [[4] CNBC — Meta tanks nearly 9%, Microsoft jumps 9% as the AI trade splits Big Tech ↗](https://www.cnbc.com/2026/07/30/microsoft-msft-meta-stock-today-earnings.html) [[5] ABC News — Meta shares drop as Q2 profit declines due to legal expenses and sev… ↗](https://abcnews.com/Business/wireStory/meta-shares-drop-q2-profit-declines-due-legal-135206558) The stories that matter, in one email. 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