Microsoft reported record quarterly profit on Wednesday as its massive investment in artificial intelligence began delivering returns for shareholders, while Meta Platforms saw profits decline 14% after cutting its workforce and facing mounting legal costs — a stark contrast that highlights the uneven distribution of AI's economic benefits across the tech sector.
For the April-June period, Microsoft's net profit climbed 31% to a record $35.8bn (€31.3bn), though the figure included a $3.2bn (€2.8bn) unrealised gain on its investment in AI company Anthropic. Revenue rose 18% year-on-year to $90bn (€78.7bn), beating analysts' forecast of $87.6bn (€76.6bn). The company's shares surged by as much as 10% in pre-market trading Thursday.
AI Infrastructure Drives Growth — But Who Benefits?
Microsoft's Azure cloud business, which provides the computing infrastructure for enterprise AI applications, saw revenue increase by 43% in the quarter. The company said demand for Azure continued to exceed available capacity, despite bringing additional computing infrastructure online. For the full fiscal year ended in June, Azure revenue surpassed $100bn (€87.4bn) for the first time.
"This year, Azure revenue surpassed $100bn (€87.4bn) for the first time, and Microsoft 365 Copilot reached over 30 million paid seats, reflecting the confidence customers are placing in us to power their AI transformation," Microsoft CEO Satya Nadella said in a statement Wednesday. Michael J. Wolf, founder and CEO of Activate Consulting, said the concurrent Azure and Copilot growth indicates that Microsoft is "winning on both fronts" by "supplying the cloud infrastructure for enterprise AI while monetising the AI tools embedded in the products workers use every day."
The company forecast revenue of between $89.85bn (€78.5bn) and $90.95bn (€79.5bn) for the July-September quarter, representing growth of 16% to 17%. Azure revenue is expected to grow by approximately 45% in constant currency, up from 43% in the quarter just ended. Chief financial officer Amy Hood told investors the company's capital expenditure plans for the 2026 calendar year remain unchanged at approximately $175bn (€152.9bn) after an accounting adjustment. Hood said earlier this year that the company expects to invest $190bn (€165.9bn) in capital expenditures in 2026.
Bryan Hayes, an investment strategist at Zacks Investment Research, said in a statement that "for the first time in three quarters, the market appears willing to grant that the spending is buying something real." Danielle Criste, Microsoft's director of investor relations, said, "We remain very confident in the long-term return on these investments, given these strong demand signals, the increasing product usage we've seen and the efficiencies that we're driving across the platform."
Meta's Workforce Cuts Weigh on Results
Meta Platforms told a different story Wednesday. The Facebook and Instagram parent company earned $15.85bn (€13.8bn) in the April-June period, down 14% from $18.34bn (€16bn) in the same period a year earlier, even as revenue grew 28% to $60.8bn (€53.1bn) from $47.52bn (€41.5bn). Meta earned $6.18 (€5.40) per share, below the $7.19 (€6.30) expected by analysts surveyed by FactSet. Analysts had forecast revenue of $60.22bn (€52.6bn).
Total costs and expenses jumped 55% to $42.03bn (€36.7bn), including $2.4bn (€2.1bn) in charges related to legal proceedings and $1.18bn (€1.03bn) in severance expenses connected with Meta's May workforce reduction this year. Its operating margin narrowed to 31% from 43% a year earlier. The company didn't disclose how many workers were affected by the May cuts.
Mark Zuckerberg, Meta's CEO, said in a statement: "AI is accelerating our core business today, powering our next generation of products, and opening the door to entirely new enterprise opportunities. The results are already showing, and I'm optimistic about the potential ahead."
Why This Matters:
The diverging fortunes of Microsoft and Meta reveal a fundamental tension in the AI economy: while Microsoft's cloud infrastructure business captures revenue from enterprises adopting AI tools, Meta is bearing the human cost of restructuring to compete in the same space — with workers paying the price through job losses. Microsoft's $190bn investment plan for 2026 represents a bet that AI will reshape enterprise computing, but the returns are flowing to shareholders and cloud customers, not necessarily to workers whose jobs may be automated. Meta's $1.18bn in severance costs this year reflect real families and communities affected by the industry's pivot to AI. As European regulators scrutinise both companies' market power and labour practices, these results underscore the need for policies that ensure AI's economic benefits are shared more broadly — through worker retraining programmes, stronger labour protections, and public investment in digital infrastructure that doesn't depend on a handful of American tech giants. The AI transformation is happening. The question is who it will serve.