NEW YORK – Tech giants Microsoft and Meta Platforms fuelled a US$500 million (S$648 billion) rally in AI stocks on July 30 after their quarterly results showed massive investments in artificial intelligence were paying off.
In extended trade, Microsoft jumped 8 per cent and Meta surged 9 per cent, with the two Magnificent Seven companies increasing their market values by US$288 billion and US$152 billion, respectively.
Dominant AI chipmaker Nvidia – the world’s most valuable company – climbed 1 per cent, while Amazon, which reports its results on July 31, added over 2 per cent.
Meta raised the lower end of its annual capital expenditures forecast by US$2 billion, driven by its high-stakes push for “superintelligence” in the heated AI race. It now expects spending to be between US$66 billion and US$72 billion.
The Facebook and Instagram parent also forecast third-quarter revenue of US$47.5 billion to US$50.5 billion, well above Wall Street estimates as AI continued to strengthen its core advertising business
Microsoft forecast on July 30 a record US$30 billion in capital spending for the current fiscal first quarter, while delivering a blowout quarterly report with its Azure cloud-computing business powering revenue above Wall Street’s expectations and showcasing the growing returns on its AI bets.
Microsoft’s higher-than-expected capital expenditure forecast – its largest-ever for a single quarter – put it on track to potentially outspend its rivals over the next year. It came after Google said it would spend more on data centres to meet demand for AI services, and Meta projected higher sales with only modest increases in spending.
The trio of results could help resolve investor questions about whether Big Tech is benefiting from its massive data centre buildout, with capital spending to reach US$330 billion in 2025.
Microsoft’s cloud business still trails market leader Amazon Web Services, which had a head start in cloud computing and brought in US$107.56 billion in its most recent fiscal year. But investors said Microsoft’s new revenue figure indicates its investments are translating to increased sales.
Rival Alphabet’s earnings also showed last week that AI spending was rising, but so were the returns, as it beat revenue estimates and lifted its outlay forecast by US$10 billion.
Microsoft has said the spending is crucial to overcoming supply constraints that have hampered its ability to meet soaring AI demand. In its just-ended fiscal fourth quarter, capital spending rose 27 per cent to US$24.2 billion.
The company has emerged as an early leader in making money from AI, thanks to its exclusive access to OpenAI’s technology. The tie-up has helped attract scores of businesses to its cloud service and allowed Microsoft to swiftly roll out AI products such as its M365 Copilot AI assistant for enterprises.
Microsoft is just US$200 billion short of becoming only the second company after Nvidia to hit a US$4 trillion valuation, with its shares up about 20 per cent in 2025.
But investor doubts have risen about the OpenAI tie-up as the companies renegotiate the deal and the start-up shifts some workloads to rivals, including Google and Oracle.
Media reports have said the two are at a deadlock over how much access Microsoft will retain to OpenAI’s tech and its stake if OpenAI converts into a public-benefit corporation.
Microsoft has tried to reduce its reliance on OpenAI by developing in-house AI technology and broadening its model line-up with partners such as xAI, Meta and France’s Mistral, hosting their models on Azure for clients. REUTERS