Meta Misses on Profit Despite Revenue Beat; Microsoft Tops Estimates on Azure
Summary
- Meta said revenue in the second quarter topped market expectations, but operating profit, net income, and EPS declined.
- Meta said heavy AI infrastructure investment drove a sharp increase in capital expenditures and a steep drop in free cash flow.
- Microsoft said strength in Azure and Copilot pushed revenue, adjusted EPS, and net income above market expectations, though free cash flow fell because of high capital expenditures.
Forecast Trend Report by Period
Meta's revenue beat estimates in the second quarter, but profit fell as costs surged; Microsoft exceeded expectations on Azure strength
Meta Platforms, the parent of Facebook, and Microsoft both continued heavy investment in artificial intelligence, but their results diverged.
Meta said July 29 that second-quarter revenue rose 28% from a year earlier to $60.8 billion, topping market estimates of $60.17 billion.
Operating profit, however, fell 8% to $18.78 billion as expenses jumped more than 55%. Net income dropped 14% to $15.85 billion, and earnings per share came in at $6.18, below the consensus estimate of $7.22.
Expanded investment in AI infrastructure also squeezed cash flow. Capital expenditures totaled $31.08 billion in the second quarter, while free cash flow plunged to $780 million from $8.55 billion a year earlier.
Microsoft, by contrast, reported fiscal fourth-quarter 2026 revenue of $90.01 billion for the April-to-June period, up 18% from a year earlier and above market expectations of $87.62 billion. Adjusted earnings per share were $4.74, beating estimates of $4.24. Net income rose to $35.77 billion from $27.23 billion a year earlier.
The cloud business led the performance. Revenue from Azure, Microsoft's core cloud platform, and Copilot, its AI work-assistance service, topped market expectations.
Microsoft's fourth-quarter capital expenditures, however, rose about 70% from a year earlier to $41 billion, while free cash flow fell 23% to $19.64 billion.
Kim Yeon-ji, Hankyung.com reporter kongzi@hankyung.com
Korea Economic Daily
hankyung@bloomingbit.ioThe Korea Economic Daily Global is a digital media where latest news on Korean companies, industries, and financial markets.