Microsoft and Meta fuel $648 billion gain in AI stocks as investments pay off
Both tech giants raised capital spending after their quarterly results showed their massive investments in AI were paying off.
NEW YORK - Tech giants Microsoft and Meta Platforms added a combined half a trillion dollars in stock market value late on July 30 after their quarterly results showed massive investments in artificial intelligence (AI) were paying off.
In extended trade, Microsoft jumped 8 per cent and Meta surged 9 per cent, with the two Magnificent Seven companies increasing their market values by US$288 billion and US$152 billion, respectively.
Dominant AI chipmaker Nvidia, the world's most valuable company, climbed 1 per cent, while Amazon, which reports its results on July 31, added over 2 per cent.
Meta raised the lower end of its annual capital expenditures forecast by US$2 billion, driven by its high-stakes push for 'superintelligence' in the heated AI race. It now expects spending to be between US$66 billion and US$72 billion.
The Facebook and Instagram parent also forecast third-quarter revenue of US$47.5 billion to US$50.5 billion, well above Wall Street estimates as AI continued to strengthen its core advertising business
Microsoft forecast on July 30 a record US$30 billion (S$38.9 billion) in capital spending for the current fiscal first quarter, while delivering a blowout quarterly report with its Azure cloud-computing business powering revenue above Wall Street's expectations and showcasing the growing returns on its AI bets.
Microsoft's higher-than-expected capital expenditure forecast - its largest ever for a single quarter - put it on track to potentially outspend its rivals over the next year. It came after Google said it would spend more on data centres to meet demand for AI services, and Meta projected higher sales with only modest increases in spending.
The trio of results could help resolve investor questions about whether Big Tech is benefiting from its massive data centre buildout, with capital spending to reach US$330 billion this year.
Microsoft's cloud business still trails market leader Amazon Web Services, which had a head start in cloud computing and brought in US$107.56 billion in its most recent fiscal year. But investors said Microsoft's new revenue figure indicates its investments are translating to increased sales.
Rival Alphabet's earnings also showed last week that AI spending was rising, but so were the returns, as it beat revenue estimates and lifted its outlay forecast by US$10 billion.
Microsoft has said the spending is crucial to overcoming supply constraints that have hampered its ability to meet soaring AI demand. In its just-ended fiscal fourth quarter, capital spending rose 27 per cent to US$24.2 billion.
The company has emerged as an early leader in making money from AI thanks to its exclusive access to OpenAI's technology. The tie-up has helped attract scores of businesses to its cloud service and allowed Microsoft to swiftly roll out AI products such as its M365 Copilot AI assistant for enterprises.
Microsoft is just US$200 billion short of becoming only the second company after Nvidia to hit a US$4-trillion valuation, with its shares up about 20 per cent this year.
But investor doubts have risen about the OpenAI tie-up as the companies renegotiate the deal and the start-up shifts some workloads to rivals, including Google and Oracle.
Media reports have said the two are at a deadlock over how much access Microsoft will retain to OpenAI's tech and its stake if OpenAI converts into a public-benefit corporation.
Microsoft has tried to reduce its reliance on OpenAI by developing in-house AI technology and broadening its model lineup with partners such as xAI, Meta, and France's Mistral, hosting their models on Azure for clients. REUTERS
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Straits Times
11 minutes ago
- Straits Times
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Sign up now: Get ST's newsletters delivered to your inbox Mr Mark Jeremy Low, founder and executive director of Lau Wang Claypot Delights, at the Bugis+ outlet. SINGAPORE – A serial entrepreneur since he was 21, Mr Mark Jeremy Low once juggled running three wonton noodle stalls, one claypot food stall and two KTV pubs, all while working as a property agent. But his monthly income was unstable, fluctuating between $2,000 and $8,000. Most months, he could barely stay afloat. 'I was the boss of so many businesses, but I wasn't making money,' says Mr Low. 'Come Chinese New Year, after giving out bonuses, I'd be broke. There were always unforeseen expenses, such as fridges breaking down and equipment issues. Whatever I drew as a salary went right back into my businesses. The only stable thing was expenses.' 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ST PHOTO: CHONG JUN LIANG The youngest of three children, Mr Low, now 40 and the founder and executive director of Lau Wang Claypot Delights, started the brand with a Yishun coffee-shop stall in 2012. He found he had limited say in running his wonton noodle stalls, as business decisions had to be approved by the franchise owner. 'I wanted to start my own brand so that I can have full control over how I want to run my business,' he says. He decided on claypot cuisine as he was fond of claypot dishes – such as sesame oil chicken and herbal frog leg soup – from a neighbouring stall at the Bishan coffee shop where one of his wonton noodle outlets was located. The couple running the claypot stall had shut their business in 2010, but he managed to contact them in 2011. He convinced the wife, Ms He Yun Ping, 49, to sell him all 12 of her recipes, help launch his first stall in Yishun and train new staff. Mr Low convinced a former claypot food stallholder to sell him her recipes and help him start his stall. ST PHOTO: CHONG JUN LIANG But it was difficult for new hires to master the claypot cooking techniques quickly, especially without detailed standard operating procedures. Ms He agreed to stay on as his main chef and eventually assumed the role of operations manager, a position she still holds today. The first outlet broke even within five months. In July 2013, Mr Low invested $120,000 – a combination of his savings a nd m oney from a silent investor – to open a second outlet, a standalon e eatery in Serangoon Central that could seat 50 diners. It was a rocky start. The eatery lost $15,000 in its first month, then $10,000, followed by $5,000. Business did not stabilise until a year later. 'Standalone eateries have higher costs. People don't just walk in. You have to earn your customers,' he says. 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11 minutes ago
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Business Times
an hour ago
- Business Times
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Indian business and trade groups are supporting the government's stance on the deal as the negotiations for a US-India trade deal continue. Negotiating tactic Jewellery businesses 'are worried but they are not panicking' because they hope a more favourable deal can be worked out, said Ray of the gems export body. 'The negotiation that should be happening should be a win-win, not a win-lose.' The abrupt announcement by Trump over social media when negotiations with India were ongoing 'seems like a knee-jerk reaction', according to Rohit Kumar, founding partner at public policy research firm The Quantum Hub. 'This appears to be a negotiating tactic aimed at unresolved discussion points,' Kumar said. BLOOMBERG
