{"id":397471,"date":"2026-01-29T20:44:07","date_gmt":"2026-01-29T20:44:07","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/397471\/"},"modified":"2026-01-29T20:44:07","modified_gmt":"2026-01-29T20:44:07","slug":"big-tech-results-show-investor-demand-for-payoffs-from-heavy-ai-spending-technology","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/397471\/","title":{"rendered":"Big tech results show investor demand for payoffs from heavy AI spending | Technology"},"content":{"rendered":"

Big tech earnings so far this week have sent a clear warning: investors are willing to overlook soaring spending on artificial intelligence<\/a> if it fuels strong growth, but are quick to punish companies that fall short.<\/p>\n

The contrast was clear in Thursday\u2019s stock market reaction to earnings from Microsoft<\/a> and Meta<\/a>, highlighting how dramatically the stakes have changed since the launch of ChatGPT<\/a> started the AI<\/a> boom more than three years ago.<\/p>\n

Shares of the Instagram<\/a> parent surged more than 9% on strong sales, while those of Microsoft slumped 10% after its cloud business failed to impress.<\/p>\n

\u201cThe market appears to be questioning whether these massive capital expenditure hikes will generate sufficient returns,\u201d said Jesse Cohen, senior analyst at Investing.com. \u201cThis reflects a growing divide between tech companies\u2019 AI ambitions and Wall Street\u2019s patience for open-ended investment cycles.\u201d<\/p>\n

After riding its first-mover advantage with OpenAI to become the world\u2019s most valuable firm in 2024, Microsoft<\/a> is now under growing investor pressure to justify its soaring capital outlay.<\/p>\n

Microsoft reported revenue growth in its Azure cloud-computing business that was only slightly above expectations.<\/p>\n

In contrast, AI bolstered ad targeting at Meta, boosting revenue by 24% in the December quarter and aiding a rosy first-quarter forecast. The results show that the Facebook<\/a> owner\u2019s gains from AI were helping fund its capital spending, which is expected to jump as much as 87% to $135bn this year.<\/p>\n

\u201cMeta\u2019s headline numbers are a really interesting reflection of the market\u2019s attitude toward spending in the AI space,\u201d said John Belton, portfolio manager at Gabelli Funds.<\/p>\n

\u201cAll else equal, the market would typically be concerned, but they have a big revenue guide for the first quarter.\u201d<\/p>\n

Microsoft also faced pressure after a disclosure that OpenAI, its prized holding, accounts for 45% of its cloud backlog. Investors are worried that some $280bn could be at risk as the unprofitable startup loses momentum in the AI race.<\/p>\n

The ChatGPT creator had issued an internal \u201ccode red\u201d in December after Google\u2019s Gemini 3 launched to positive reviews and is playing catch-up in AI coding to Anthropic\u2019s Claude Code, which has hit an annualized run rate of more than $1bn.<\/p>\n

\u201cMicrosoft\u2019s deep ties to OpenAI underpin its leadership in enterprise AI, but they also introduce concentration risk,\u201d said Zavier Wong, market analyst at eToro.<\/p>\n

Microsoft predicted Azure growth to stay stable in the period from January to March at 37% to 38%, after slowing in the last three months of 2025, partly due to AI chip capacity constraints.<\/p>\n

\u201cIf I had taken the graphics processing units that just came online in the first quarter and second quarter, and allocated them all to Azure, the KPI [growth] would have been over 40%,\u201d Microsoft finance chief Amy Hood said on a post-earnings call.<\/p>\n

She added that the use of chips for internal development efforts had limited the growth.<\/p>\n

For Meta, the revenue growth underscored that its AI pivot was paying off and helping the company catch up to early leaders.<\/p>\n

Its revenue rose 24% in the fourth quarter, and Meta forecast growth to accelerate as much as 33% in the current quarter.<\/p>\n

The company is racking up bills at large cloud providers, such as Alphabet\u2019s Google, which bodes well for the search giant\u2019s results next week. Alphabet shares rose 1.6%.<\/p>\n

Using AI \u201cwill both improve the quality of the organic experience and of advertising\u201d, Meta\u2019s CEO, Mark Zuckerberg, said.<\/p>\n

\u201cI think that will have a compounding effect,\u201d he added, as Meta predicted a jump of 43% in total expenses this year to $169bn.<\/p>\n

Growing spending was also the theme at Elon Musk\u2019s Tesla, which will double outlay this year to more than $20bn as it pivots to AI, humanoid robots and personal vehicles that can drive themselves.<\/p>\n

The company also reported quarterly profit and revenue that were above expectations, though its yearly profit and revenue had declined for the first time ever. Shares rose by 2.9%.<\/p>\n

Analysts said the results left some mismatch between corporate AI goals and investors\u2019 demand for payoffs.<\/p>\n","protected":false},"excerpt":{"rendered":"Big tech earnings so far this week have sent a clear warning: investors are willing to overlook soaring…\n","protected":false},"author":2,"featured_media":397472,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[554,733,4308,86,56,54,55],"class_list":{"0":"post-397471","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-artificial-intelligence","10":"tag-artificialintelligence","11":"tag-technology","12":"tag-uk","13":"tag-united-kingdom","14":"tag-unitedkingdom"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/397471","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=397471"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/397471\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/397472"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=397471"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=397471"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=397471"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}