What We Learned From Meta, Microsoft and Tesla

If quarterly earnings announcements were a contest, Mark Zuckerberg would have won Wednesday. You might even say investors are coming to terms with Meta Platforms’ you-only-live-once approach to spending on AI. The owner of Facebook and Instagram reported stronger than projected fourth-quarter growth of 24% and projected that revenue growth would accelerate to 30% in the first quarter. Meta hasn’t grown that fast since the go-go days of 2021. To be sure, some, though not all, of the growth is coming from the dollar’s weakness, which boosts overseas revenue when translated back into dollars. Meta’s ad business is also getting a lift from AI tech, executives detailed. Investors were impressed: Meta stock jumped as much as 10% in after-hours trading.

It was a different story for Microsoft, which also reported Wednesday. Its top line slowed just a tad, to 17% from 18% in the previous quarter, thanks to a slight slowdown at its Azure cloud unit. Investors sold the stock down more than 6% after-hours. Microsoft stock hasn’t been a world-beater for much of the past year, so that selling is notable. On a conference call, analysts made it clear investors are worried about whether Microsoft is getting a return on its AI spending and about its cloud unit’s reliance on OpenAI as a customer. Investors should think more broadly. Microsoft’s profit margins are higher from software than from server rentals in Azure. What Microsoft needs is to persuade its software customers to buy AI-powered features, which it is starting to do. The company disclosed it had 15 million paying subscribers for Office 365 Copilot, which isn’t huge in the big picture (in 2024, the company said Office had 400 million Office 365 paying subscribers). But it’s a start. (As Aaron’s story today showed, CEO Satya Nadella and his colleagues are moving fast to improve Copilot-related products using advanced technology from Anthropic.)