Microsoft Maintains 2026 CapEx Guidance; Meta Raises Lower End

As Microsoft and Meta Platforms released their quarterly earnings side by side on the 29th local time, both companies showed significant increases in capital expenditures (CapEx) to expand artificial intelligence (AI) infrastructure.

However, their share paths diverged depending on whether this spending translated directly into earnings.

During its earnings release for the fourth quarter of fiscal 2026 (April to June) on this day, Microsoft reported that quarterly CapEx surged 69% year-on-year to $41 billion (approximately 60.1 trillion won).

About two-thirds of this spending was funneled into purchasing central processing units (CPUs) and graphics processing units (GPUs) to support Azure cloud demand, in-house AI apps, and research and development (R&D).

Despite such heavy spending, net income rose 31% from a year earlier to $35.8 billion, beating the market expectation of $31.5 billion.

CEO Satya Nadella said, "We are driving innovation across the cost-to-performance curve and helping every customer turn tokens into business outcomes."

Microsoft shares fell 0.71% in regular trading on this day, but rebounded 2.5% in after-hours trading to reclaim the $400 mark.

Microsoft announced that it is maintaining its annual CapEx guidance at previous levels.

Meta posted a second-quarter (April to June) CapEx of $31.08 billion (approximately 45.5632 trillion won), marking an 83% surge compared to $17.01 billion in the same period last year.

Although revenue grew 28%, net income dropped 14% to $15.8 billion, falling short of the market consensus of $18.8 billion.

In the wake of this, Meta shares plummeted 6.2% in after-hours trading.

Meta adjusted its annual CapEx guidance from the previous range of $125 billion to $145 billion, raising the lower end to set a new range of $130 billion to $145 billion (approximately 190.6 trillion to 212.6 trillion won).

CEO Mark Zuckerberg emphasized, "AI is accelerating our core business today, powering our next-generation products, and opening doors to entirely new corporate opportunities. The results are already showing, and we are optimistic about the possibilities ahead."

The sharp rise in CapEx is also putting pressure on free cash flow (FCF).

Meta's second-quarter FCF shrank by over 90% year-on-year to $780 million from $8.55 billion, while Microsoft's dropped 23% to $19.64 billion.

Alphabet, which released its earnings earlier, saw its quarterly FCF turn negative for the first time since its IPO due to rising CapEx, establishing the AI investment race as a common trend squeezing cash flows across big tech.

Alphabet raised its annual CapEx forecast from a range of $185 billion to $190 billion (approximately 281 trillion won) to $195 billion to $205 billion (approximately 288 trillion to 303 trillion won).

The company also stated that next year's CapEx will increase "significantly" compared to this year.

On this day, Microsoft and Meta did not provide forecasts for next year's CapEx.

At Meta, Chief Financial Officer (CFO) Susan Li sidestepped related questions, and Jefferies analyst Brent Thill described the mood during the conference call by saying, "Everyone was asking why there wasn't a more specific plan."

The absence of specific outlooks is interpreted as a move mindful of Wall Street's anxiety over astronomical investments ballooning in AI infrastructure.
 
(Photo courtesy of Microsoft, Yonhap News)
※ Please note: This article was translated by AI and may contain errors.