Three of the biggest names in tech reported earnings this week, and the market's verdict on their artificial intelligence spending was anything but uniform. Microsoft shares climbed about 15% to near $451 after its July 29 report, while Amazon got a unanimous thumbs-up from analysts. Meta, by contrast, saw its stock drop roughly 8% to about $539, now 23% below its mid-July high.
Microsoft's AI Bet Backed by Demand
Microsoft's capital expenditure hit $41 billion, much of it funneled into AI data centers. But the company also disclosed a $678 billion backlog of signed customer contracts, a figure that suggests the spending is tied to real demand rather than speculative buildout. Azure cloud growth is projected to accelerate to 29% year-over-year, up from 28% in the previous quarter. Trading volume on Microsoft shares reached its highest since June 22, and the Chaikin Money Flow (CMF) indicator turned positive to 0.04, though it remains below its July 24 peak. Wall Street rates the stock a Strong Buy, with 24 of 25 firms rating it Buy; only Barclays trimmed its target.
Amazon's Cloud Reacceleration and a One-Time Gain
Amazon's earnings included a paper gain on its Anthropic stake, which boosted headline EPS to $5.75. Excluding that, core profit rose 43%. AWS reaccelerated, and the company disclosed a $496 billion backlog of signed customer demand. Free cash flow turned negative over the past year due to heavy AI spending, but analysts are bullish: all 28 covering firms rate Amazon a Buy, and every major desk raised price targets after earnings. The put-to-call volume ratio fell from 0.74 to 0.54, indicating bullish options positioning, though the open interest ratio held steady at 0.66, suggesting longer-term money has not fully committed.
Meta's Free Cash Flow Collapse Raises Questions
Meta's revenue grew 28%, but free cash flow collapsed to $784 million from $8.55 billion a year earlier. The company leaned on about $25 billion of new debt to fund its dividend after capital expenditure nearly consumed all cash flow. Unlike Microsoft and Amazon, Meta disclosed no backlog of signed demand for its AI spending. Its core apps earned less, contributing to investor concern. The stock fell about 8% after earnings and is roughly 23% below its mid-July high.
The divergence highlights a key question for investors: which companies can show that their AI investments are translating into customer commitments? Microsoft and Amazon provided concrete backlogs; Meta did not. The next earnings season will offer another look at whether those backlogs are converting into revenue.
