Microsoft and Meta have firmly committed to their AI growth strategies, reporting strong earnings that contradict earlier analyst concerns about demand in the tech sector. Meta raised its capital expenditure guidance significantly, while Microsoft experienced a remarkable jump in cloud revenue driven by AI services. Both companies are showing confidence in their investments, as evidenced by increases in spending on essential AI infrastructure to meet customer needs. This ongoing enthusiasm contrasts with reports indicating a potential slowdown in other Big Tech data center leasing activities, particularly involving Amazon.
Microsoft and Meta's steady increase in capital spending for AI infrastructure signals their confidence in ongoing AI demand, which continues to defy recent skepticism from analysts.
Despite worries over data center demand, Microsoft's cloud revenue surged to $42.4 billion, showcasing strong growth in AI services that outpaced analyst forecasts.
Meta adjusted its capital expenditure guidance upward, illustrating its commitment to AI technology, with a notable increase from $60-65 billion to $64-72 billion for the year.
Jefferies analysts noted unexpected growth in AI demand for Microsoft, citing a substantial rise in AI tokens processed, reflecting strong market appetite despite prior concerns.
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