Meta vs Microsoft – AI Euphoria or ExhaustionThe AI boom that lifted Big Tech to record highs may be entering its most delicate phase yet. Meta and Microsoft, two of the biggest winners of the AI wave, are now testing investors’ patience with a spending spree that’s starting to look excessive even by Silicon Valley standards.
In the last quarter alone, Meta, Microsoft, and Alphabet poured a combined $78 billion into data centers, GPUs, and AI infrastructure — an 89% increase year-over-year. The market’s reaction was telling: Meta and Microsoft both slipped after earnings, as traders began to question whether the growth in AI revenue can keep pace with the ballooning costs.
Microsoft’s $34.9 billion in capex didn’t deliver a higher growth rate for Azure, and Meta warned that next year’s spending will accelerate “significantly.” Google, by contrast, managed to calm investors with solid cloud growth and a more balanced tone — but even it now projects capex as high as $93 billion for 2025.
The common thread is clear: all three are betting the next decade on AI, but the near-term return on that investment remains murky. For Microsoft, capacity constraints still limit revenue growth. For Meta, the challenge is sharper — it’s spending on infrastructure without a clear monetization path, relying mostly on advertising optimization and early-stage hardware bets.
From a market perspective, both charts show fatigue setting in. After a year of relentless gains, momentum is flattening and volatility is creeping back in. The market still believes in AI — but it’s starting to question how much belief is already priced in.
If earnings growth doesn’t catch up with capex soon, these charts could be signaling the first cracks in the AI narrative. Whether this is just a pause or the beginning of a revaluation cycle will depend on how quickly these investments translate into tangible profit, not just GPU headlines.
Idea Summary:
NASDAQ:META and NASDAQ:MSFT are spending at record levels to stay ahead in AI, but returns are slowing. The charts hint at exhaustion — investors may be entering the first real “AI reality check.
