Wall Street witnessed a tech-fueled surge late Wednesday, as AI leaders Microsoft and Meta Platforms delivered blowout earnings, adding about $450 billion in combined market capitalization. Shares of Microsoft and Meta soared — a clear signal that AI investments are paying off big.
Microsoft’s Cloud & AI Drive Record Results
Microsoft reported stellar Q4 FY2025 results, with earnings per share hitting $3.65 — beating estimates by $0.30 — and revenues climbing 18% YoY to $76.4 billion. The key growth driver? Its Azure cloud and AI infrastructure, with Azure projected to grow 37% in constant currency next quarter.
Microsoft now forecasts record capital expenditures of $30 billion this quarter as it aggressively expands its AI footprint. The company has also become the second-ever public firm to cross a $4 trillion market cap, joining NVIDIA NVDA.
Meta Surges on AI-Powered Advertising
Meta also delivered a strong Q2, reporting EPS of $7.14, far exceeding the $5.83 estimate. Revenues jumped 22% to $47.5 billion, fueled by AI-driven ad technologies that boosted campaign automation and recommendations.
Its user base continues to expand, with 3.48 billion daily active users across Facebook, Instagram, WhatsApp and Messenger. Meta also raised its 2025 capex forecast to as much as $72 billion, reflecting deeper AI investments.
The AI Boom: Still in Early Stages
Despite concerns about high capital expenditure, the long-term growth potential of AI remains enormous. According to the UNCTAD, the global AI market is expected to explode from $189 billion in 2023 to $4.8 trillion by 2033 — a 25-fold increase.
Microsoft’s partnership with OpenAI continues to fuel its AI ambitions, integrating ChatGPT across Azure and its Microsoft 365 ecosystem. At the same time, Microsoft is developing its own models like Phi AI and MAI-01 to compete with OpenAI and Google.
Consumer Push & Strategic Spending Ahead
On the consumer front, Microsoft is set to end Windows 10 support in October, likely boosting Windows 11 upgrades. AI features continue to roll out across Copilot, Edge and Windows, creating fresh revenue streams.
Looking ahead, Microsoft plans to spend $80 billion on AI infrastructure in 2025, joining Google and Amazon in a multi-billion-dollar arms race to dominate the AI future.
ETFs in Focus
Given this trend, investors may want to invest in Big Tech exchange-traded funds (ETFs) likeRoundhill Magnificent Seven ETF MAGS, MicroSectors FANG+ ETN FNGS, Technology Select Sector SPDR Fund XLK, Vanguard Information Technology Index Fund ETF VGT.
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NVIDIA Corporation (NVDA): Free Stock Analysis Report Technology Select Sector SPDR ETF (XLK): ETF Research Reports Vanguard Information Technology ETF (VGT): ETF Research Reports MicroSectors FANG+ ETN (FNGS): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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