30 July 2026
If you are covering the latest results from Microsoft and Meta, please find below a comment from Ben Barringer, head of technology research at Quilter Cheviot:
"Microsoft and Meta's latest results highlight for investors the stages of patience required with the current AI boom. As AI advances and more and more capex gets ploughed into the system, there are naturally going to be three stages of winners. So far, we have seen the semiconductor companies be the big beneficiaries of this demand, but these results point to an inflection point for Microsoft specifically.
"It has been a strong period for Microsoft with very strong growth of CoPilot, now up to 30m seats, while the Azure cloud business was up 43% showing very good acceleration. Microsoft has been very efficient at bringing on supply at the right time and it has remarkable visibility of earnings going forward. Its backlog is up 84%, with two years' worth of revenues confirmed. Even without OpenAI related work, Microsoft is winning business and diversifying its revenue base. Capex did go down, which could freak people out, but this is really as a result of accounting. Overall, Microsoft is rewarding investors for the patience shown and is now in a really strong position to capitalise on the demand for AI enabled services.
"Meta, meanwhile, will require even more patience as it switches on supply and has to build the products that people can then use to make their personal and professional lives more efficient. Right now, the narrative from Mark Zuckerberg is a little light on detail and relying on what could be done in the future.
"Meta still has a crucial role to play in the AI world, but it is still finding its way somewhat and that is why we see both costs and revenues looking a little volatile. Indeed, Meta has suffered fairly substantial severance and legal costs as it cuts its workforce and defends itself against various litigation. This has had a negative impact on profits, and we are seeing a slight deceleration in revenues going forward. The stock is looking particularly cheap now compared to peers, so there is potential upside from here, but patience is required as the AI story evolves."
