Microsoft and Meta Profits Scrutinize Returns on AI Investments

Giants' AI Investments Begin to Bear Fruit

The question of whether the technology sector's massive investments in artificial intelligence (AI) are translating into profitability has resurfaced with the latest quarterly financial results announced by Microsoft and Meta Platforms. The performance of both companies pointed to tangible returns from AI expenditures, somewhat alleviating investor concerns on the matter.

Spending and Expectations at Record Levels

The four major technology companies—Microsoft, Meta, Alphabet, and Amazon—are expected to make approximately $505 billion in capital expenditures by 2026. This figure is significantly above estimates for 2025 and highlights the sector's emphasis on AI infrastructure. Wall Street has been closely monitoring the impact of these massive expenditures on corporate profitability.

Microsoft's strong growth in cloud and AI services demonstrated that its investments in this area are yielding positive results. Similarly, Meta's increase in advertising revenue highlighted the contribution of AI-powered advertising and content recommendation systems. These developments revealed that AI investments are not just a promise for the future but are also shaping today's income statements.

Other Developments in the Sector

The financial returns of AI are not limited to software and internet companies. Semiconductor manufacturing equipment giant ASML announced record profits for 2025 driven by AI demand, but also stated it would cut some job positions to increase efficiency. This situation demonstrates the dual-sided impact of AI across industries. On the other hand, AMD's 2026 targets also aim to capture market share in the AI space with its EPYC and MI series processors.

In the financial sector, companies like Pagaya Technologies show there is growth potential in credit assessment and risk management using AI. AI usage is also increasing in the public sector; Anthropic's pilot project to develop an AI assistant for the government stands out as one of the new steps in this field.

Looking Ahead to Coming Weeks

Following Microsoft and Meta, the results that Alphabet and Amazon will announce next week will have a similar focus. All this financial data will clarify which companies in the AI race are more efficiently converting their investments into profit. Analysts state that high capital expenditures will continue, but companies' ability to manage these expenditures and generate returns will continue to determine their stock performance.