31 July 2025
If you are covering the latest financial results from Meta and/or Microsoft, please find below a comment from Ben Barringer, head of technology research at Quilter Cheviot:
“Both Meta and Microsoft delivered really strong results in their latest trading updates as demand for AI shows no sign of abating. Meta saw revenues up 22% as a result of a strong digital advertising market, and this figure is growing well ahead of consensus expectations. Furthermore, it has kept a lid on operating costs, choosing to hire fewer yet better people for its AI push, while capex has been nudged upwards for the year and beyond too.
“Meta is in somewhat of an AI sweet spot just now, offering services to both consumers and businesses. The real focus has been on driving engagement and using AI to better serve users of its platforms and provide more relevant content. For businesses, it is aiming to become a one-stop marketing shop where it can provide strategies and content for a company to out and drive sales. Based on these results this is clearly working, and with other areas such as the glasses tie-up with Ray-Ban looking strong, there remains a significant runway of growth for Meta yet.
“Microsoft, meanwhile, continues to execute its strategy well too, with revenues up 18% and the company guiding for double digit growth in its next financial year too. However, while AI demand is clearly helping Microsoft, it isn’t the only game in town for the tech giant. Its cloud business, Azure, saw revenues grow 39%, well ahead of expectations, highlighting that demand for more traditional cloud based services remains strong. Microsoft has a good backlog in this business area too so we should see strong results continue to flow there.
“The company did announce it was slowing the growth of its capex and changing the mix slightly, but as demand remains strong for AI we will likely see the likes of data centres take priority for a number of years yet. Everyone is waiting for the great AI slow down, but the tech giants are not playing that game. Demand is likely to remain strong into 2026, with a slowdown perhaps being pencilled in for 2027 or 2028. For now, Meta and Microsoft won’t trouble themselves too much with those predictions. Growth is strong today and it is putting them in a good position for the future.”
