Microsoft and Meta are both set to report their quarterly earnings after the close of trading on Wednesday, with investor attention sharply focused on their capital expenditure guidance and AI strategies. Microsoft is expected to announce fiscal fourth-quarter results, with analysts projecting adjusted earnings per share of $4.24 and revenue of $87.62 billion, representing 14.6% year-over-year growth for the quarter ended June 30. Growth is anticipated to accelerate to 15.4% in the September quarter. Analysts are also looking for Azure cloud growth of 40% and 40.2% at constant currency. Microsoft shares have declined about 19% in 2026, underperforming the S&P 500, which has gained 8.5%, reflecting investor caution amid concerns about disruption from generative AI models. Deutsche Bank analysts recommend buying Microsoft stock, noting concentration risk with OpenAI, as 45% of Microsoft's $625 billion in commercial remaining performance obligations are tied to OpenAI. Investors are keen to see if Microsoft will raise its capital expenditure and finance lease forecast for data center expansion, with Visible Alpha analysts targeting $190.5 billion, slightly above the $190 billion guidance from April. During the quarter, Microsoft introduced a cost-efficient AI coding model, appointed Dan Shapero as LinkedIn chief, and lowered Xbox Game Pass subscription prices. Executives will discuss results and issue guidance on a conference call at 5:30 p.m. ET [1].
Meta is also reporting second-quarter results, with Wall Street expecting adjusted earnings per share of $7.22 and revenue of $60.17 billion, a 26% increase from $47.52 billion a year ago. The company's core advertising business continues to benefit from AI advancements. Meta has been aggressively investing in AI since hiring Alexandr Wang in June 2025, which included a $14.3 billion investment in Scale AI. The company debuted the Muse Spark 1.1 model earlier this month, touted as the "strongest model for agentic and coding work yet" at a lower price than OpenAI and Anthropic. Meta also released Muse Image, with features available through new monthly subscription plans. The company is investing heavily in AI infrastructure, announcing a $14 billion data center project with BlackRock in El Paso, Texas, and revealing a $9 billion data center in Alberta, Canada, as well as the $50 billion Hyperion project in Louisiana. Meta shares are down 10% this year, trailing the Nasdaq, as investors question whether the company's significant investments will yield returns. Wedbush analysts maintain a hold rating, citing uncertainty around capex intensity and monetization. Meta boosted its capex forecast to $145 billion from $135 billion in April, with analysts expecting $33.9 billion in capex for Q2 and $136.7 billion for the year [2].
Both companies are facing scrutiny over their AI strategies and capital spending plans, especially in light of Alphabet's recent $15 billion increase in its 2026 capex guidance. Investors are closely watching for any updates or changes in Microsoft and Meta's forecasts, as these could have significant implications for their competitive positioning and market performance. Analyst opinions highlight ongoing debates about the risks and rewards of aggressive AI investment, with Microsoft seen as a buy despite concentration risk, and Meta facing skepticism over its ability to monetize its AI efforts [1][2].
CONCLUSION
Microsoft and Meta's upcoming earnings reports are expected to provide critical insights into their AI strategies and capital expenditure plans, which are under intense investor scrutiny. Both companies have seen their shares decline in 2026 amid concerns about the returns on their substantial AI investments. The market is awaiting guidance updates that could influence sentiment and shape the competitive landscape in the tech sector.