India, Jan 29 : Investors reacted sharply to Big Tech earnings this week, signaling that record spending is acceptable only if it translates into strong revenue growth a shift in market expectations since the launch of ChatGPT over three years ago.
Meta Platforms, the parent company of Facebook, reported a 24% jump in revenue for the December quarter, boosted by AI-enhanced ad targeting. The company also issued a first quarter revenue forecast well above estimates, suggesting that its growing sales could support planned data center investments projected to rise 87% this year to $135 billion.
“Meta’s headline numbers reflect the market’s evolving attitude toward AI spending,” said John Belton, portfolio manager at Gabelli Funds. “Typically, such high outlays would raise concern, but the strong revenue guidance offsets that worry.”
By contrast, Microsoft posted modest Azure growth that slightly exceeded expectations, despite record quarterly AI-related expenditures. The disclosure that OpenAI accounts for 45% of Microsoft’s backlog raised concerns over $280 billion potentially at risk as the unprofitable AI startup faces stiff competition from rivals like Anthropic’s Claude Code. Following the report, Microsoft shares fell 6.5% in after-hours trading, while Meta’s stock surged 10%.
“Our first-mover advantage in enterprise AI with OpenAI now comes with pressure to justify these massive capital outlays,” noted Microsoft finance chief Amy Hood. Azure growth is projected to remain stable from January to March, constrained in part by AI chip capacity limitations.
Meta, meanwhile, has aggressively ramped up AI investments, including hiring top talent and committing billions to new data centers, with CEO Mark Zuckerberg emphasizing AI’s role in enhancing both user experience and advertising effectiveness. The company expects revenue growth of up to 33% in the current quarter.
Elon Musk’s Tesla is also doubling AI-related spending to over $20 billion this year, focusing on autonomous vehicles, humanoid robots, and AI systems. While Tesla’s quarterly results exceeded expectations, its shares gave up some gains after announcing the record outlay.
Analysts note a growing disconnect between corporate AI ambitions and investor expectations. “The market is questioning whether these massive expenditures will generate sufficient returns,” said Jesse Cohen, senior analyst at Investing.com. “Tech companies are pushing the boundaries of AI, but Wall Street wants tangible payoffs, not open-ended investment cycles.”