Microsoft and Meta earnings previews
Earnings previews
Microsoft (NASDAQ: MSFT) and Meta (NASDAQ: META)
The strong growth in investing in the technology infrastructure to support generative AI (GAI) has been a focus the past year and is projected to expand this year. Alphabet increased their CapEx guidance by $10 billion to $85 billion for this year after reporting Q2 2025 on July 23, 2025. While the projected OpEx growth has decreased, the much stronger pace of the expected CapEx to support the technology infrastructure for AI has caused some concern as the significant ramp in spending is projected to grow faster than revenues. Will Meta and Microsoft follow Alphabet and increase their CapEx too?
Microsoft
According to Visible Alpha consensus, total revenues expected for Q4 have remained stable since late January, driven by a resilient view of its core business segments. However, the new Azure AI Services segment is projected to remain strong for FY 2025, with consensus estimates now expecting $11.5 billion, up from $10.8 billion. Expectations for this segment in Q4 2025 have increased by almost 15% since last quarter and 30% since late January 2025. Profitability is also expected to remain resilient for the Company.
We are closely watching what the company will say about the outlook for AI and Copilot, as Microsoft’s FY 2025 CapEx numbers have continued to increase steadily since 2019. According to consensus projections, CapEx estimates are expected to nearly double from $44.5 billion in FY 2024 to currently $69.4 billion in FY 2025 and $85.1 billion in FY 2026.
Microsoft stock has traded up 28.0% since the last earnings release and is up 37.7% since January 2024. The consensus P/E for 2025 has come down from 31x last quarter and is now 29x. Could the Q4 release and FY 2026 outlook drive more meaningful outperformance in the stock?
Meta Platforms
According to Visible Alpha consensus, total revenues for Q2 are expected to be $44.8 billion, driven by solid performance in the Family of Apps segment, especially in the U.S. and Europe. Operating profit is expected to be $17.1 billion, driven by resilience in the Family of Apps and consensus losses of -$4.9 billion for Reality Labs.
For 2025, earnings expectations for operating income from the Family of Apps have increased nearly $2.0 billion to $95.0 billion, driven by higher ad revenue per DAU in the US and internationally. The management commentary on the outlook in the earnings call will be key to assessing the potential direction of revisions. In addition, the projected losses from Reality Labs for 2025 have also decreased by nearly $1.0 billion, driven by lower anticipated losses in the second half of the year.
In Q1 2025, CEO Mark Zuckerberg highlighted that the company planned to invest in servers and data centers to support AI. CapEx consensus of $67.1 billion is above the current guidance. There are questions about whether Meta will further increase their CapEx for this year and next.
META stock has been up 30.4% since the Q1 release in April and is up 106.9% since January 2024. The consensus P/E for FY 2026 has come back up to 25x from 17x earlier in the year. Will Meta remain disciplined in FY 2025 and maintain its outperformance?
