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Like those classmates with last names right next to yours, sometimes alphabetical proximity is enough to bind two people together for life. Or, at least until graduation.
And that’s kind of the case with Microsoft and Meta’s earnings reports this week, but unlike your classmates, there’s actually a reason to do so. They’re both tech behemoths, obviously. They reported on the same day. And yes, they both just so happen to start with the letter M.
But let’s add one other similarity to the list: They’re both downright obsessed with AI spending. The two companies both expect capital expenditures to continue to grow on the back of AI investments.
Meta raised its capex guidance for 2024, expecting it to fall between $38 and $40 billion, up slightly from the $37 to $40 billion it predicted previously. The company added that it anticipates “a significant acceleration in infrastructure expense growth next year.”
“Building out the infrastructure is maybe not what investors want to hear in the near term…but I just think the opportunities here are really big,” Meta CEO Mark Zuckerberg said on the company’s earnings call. “We’re going to continue investing significantly in this.”
Microsoft, meanwhile, spent $20 billion on capital expenditures, a 79% jump from last year, per the New York Times. “We are seeing AI drive a fundamental change in the business applications market as customers shift from legacy apps to AI first business processes,” Microsoft CEO Satya Nadella said in the company’s earnings call.
Okay, so they’re both still spending heavily on AI, like just about every other tech company in 2024. Shocker. How are they doing otherwise?
Meta posted $40.6 billion in revenue, while net income came in at $15.7 billion, up from $11.6 billion a year ago but still clocking in at Meta’s lowest year over year net income growth since Q2 2023, per CNBC.
Revenue for Microsoft came in at $65.6 billion, a 16% YoY rise. Net income, meanwhile, was $24.7 billion, an 11% jump for the year, surpassing both Wall Street and Microsoft’s predictions, according to the New York Times.
And despite their solid postings, they both have their own unique challenges ahead. Meta is still plagued by Zuckerberg’s (likely overzealous) virtual reality spending, though justifying AI spend is a lot easier when everyone else is doing it. And Microsoft continues to struggle to keep up with AI demand.
Maybe they’re more like those randomly assigned classmates than you thought.