Microsoft and Meta have both reported record earnings, largely fueled by progress made in the field of artificial intelligence (AI). Each beat analyst expectations in their last earnings reports. This is a huge sign of the AI revolution’s growing impact on their business models. With Microsoft’s Azure cloud services and Meta’s advertising revenue fueling this growth, investors are paying attention.
Microsoft’s Azure cloud business, a key component of the company’s strategy, has seen a substantial contribution from AI developments. In particular, Azure said that 16% of its growth that quarter was due to sales of AI services, an increase from 13% the previous quarter. This increase underscores how important AI is in supercharging Microsoft’s cloud services. It’s very much reflected as an overall tremendous driver of the company’s overall top-line revenue performance.
The firm made $70.1 billion (€62 billion) in total revenue – up 13% on last year. Microsoft’s quarterly capital expenditure jumped to $21.4 billion (€19 billion). They intend to put a jaw-dropping $80 billion (€70.7 billion) into data center infrastructure in fiscal 2025 alone.
“Cloud and AI are the essential inputs for every business to expand output, reduce costs, and accelerate growth,” – Satya Nadella
Meta’s Advertising Revenue Soars
Likewise, Meta finds itself on the as of late stunningly up-and-up with ad dollars, fueled primarily by AI hype and innovation. In the third quarter, Meta has delivered an extraordinary $42.31 billion (€37.41 billion) in total revenue. It is 16% more than a year ago and even above the anticipated $41.4 billion (€36.6 billion). The company’s advertising revenue represented a staggering 98% of its overall revenue, up to $41.39 billion (€36.6 billion).
Earnings per share increased by 35% to $6.43 (€5.69)—well ahead of expectations which had earnings at $5.28 (€4.67). Mark Zuckerberg expressed confidence in the company’s trajectory, stating, “We’ve had a strong start to an important year—our community continues to grow, and our business is performing very well.”
Beyond those very encouraging financial results, Meta seems to be on a roll with AI technology. Zuckerberg showcased some of the more thrilling achievements in augmented reality AI glasses. He claimed that Meta AI is growing the fastest of all time, with almost one billion MAUs.
“Our business is also performing very well, and I think we’re well-positioned to navigate the macroeconomic uncertainty,” – Mark Zuckerberg
Continuing Investments and Future Outlook
All of this is to say that Microsoft has real incentives to continue making big bets on AI and other complementary technologies. Similarly, Meta is poised to take advantage of the new momentum. Microsoft plans to continue focusing on its cloud services and has committed to significant investment in data centers despite having scaled back some global projects earlier this year.
The company’s GitHub Copilot AI assistant has seen huge adoption. As of today it has over 15 million users, more than quadrupling the number of users it had a year ago. Amy Hood, Microsoft’s Chief Financial Officer, proclaimed “awesome” results for the quarter. Overall, it was a very strong quarter for the company. Microsoft Cloud revenue grew 20% YoY to $42.4 billion, or up 22% YoY in constant currency driven by robust demand for their differentiated offerings.
Meta is signaling that its 2025 capital expenditures will be focused on improving the efficiency of its core business. The Sydney-based company is looking to absorb AI solutions into its ad tech model. By taking this action, it hopes to protect and increase its role in the fierce digital ad marketplace.
“This result once again shows that Microsoft is not just riding the AI wave; it’s driving it,” – Josh Gilabert
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