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    AI boosts Meta and Microsoft Q3 earnings, but outlook sours stock prices

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    Meta Platforms and Microsoft reported stronger Q3 results than predicted, with Meta’s revenues increasing by 19% to $40.59 billion and Microsoft’s by 16% to $65.59 billion. Despite this, their shares fell in after-hours trading due to revised earnings expectations and increased spending on artificial intelligence (AI). Meta has rolled out AI across WhatsApp, Facebook, and Instagram, while Microsoft’s AI-powered Azure has boosted earnings. Both firms plan continued AI investment, concerning investors. Microsoft also reduced growth expectations for Azure.

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    Even though Meta Platforms Inc. and Microsoft Corp’s Q3 earnings were better than expected, their stocks took a hit in after-hours trading on Oct. 30 since they revised their earnings predictions and hinted at plans to increase spending on artificial intelligence (AI).

    Meta announced that they had a 19% increase in their Q3 revenues from last year, totaling up to $40.59 billion. This result was higher than what the experts had predicted – $40.21 billion. Furthermore, their earnings per share (EPS) stood at $6.03, besting the predicted $5.19.

    Microsoft’s Q3 results also exceeded predictions with revenues climbing 16% from last year to $65.59 billion, which surpassed the $64.41 billion that was expected. And their EPS hit $3.30, well above the anticipated $3.08.

    However, these impressive numbers come alongside increased investment in AI. This year, Meta launched AI across its popular apps like WhatsApp, Facebook, and Instagram, thanks to which founder and CEO Mark Zuckerberg said they had a good quarter.

    Meanwhile, Microsoft announced their earnings were given a massive boost from their AI-powered Azure business.

    Despite their good news, both companies saw their shares drop in after-hours trading on Oct. 30 after an initial increase. Meta dropped from its $591.80 closing price to $573, while Microsoft slipped from $432.53 to $416.50.

    Investors were spooked by the companies’ future plans, which involved more hefty spending on AI without immediate results. Zuckerberg revealed that their AI investments would mean serious infrastructure and continued significant investment.

    Microsoft decreased its expectations for Azure’s growth from 33% to between 31% and 32% in the coming quarter. They also expect their total revenues to be between $68.1 billion and $69.1 billion, which is less than the $69.89 billion analysts expected.

    Source: Cointelegraph

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