Microsoft and Meta both beat earnings expectations by large amounts and the reason was because of AI helping their basic business. All of the forward guidance was also going to be superior because of AI.
If they were not supply constrained growth would be even better.
AI played a decisive role in the better-than-expected earnings and accelerated growth reported by both Microsoft and Meta.
Meta’s Q2 revenue surged 22% year-over-year to $47.52 billion, far above expectations (Street expected 14% growth), with CEO Mark Zuckerberg and other executives directly attributing this beat to AI-powered ad tools, improved user engagement, and better ad targeting. Notably, AI-driven optimizations led to meaningful increases in ad conversions (up 5% on Instagram, 3% on Facebook), and a “meaningful percentage” of ad revenue now comes from generative AI tools. AI also fueled a 6% increase in daily active users, reaching 3.48 billion, which enhanced monetization opportunities
Microsoft delivered 18% revenue growth versus the Street’s expectation of 14%, marking its biggest beat in years, in large part due to explosive growth in its Azure cloud business, which posted 39% year-over-year growth, also handily above the “whisper” numbers. The company explicitly stated that demand for AI services drove this outperformance, and management cited ongoing supply constraints limiting even higher growth.
Capex guidance was sharply increased by both companies to support further AI investment: Meta lifted its capital expenditure plan by ~30% over last year, projecting $66–$72 billion for 2025, predominantly for AI-related hardware and infrastructure (far above the Street’s prior 10% growth expectation). Microsoft similarly guided 25% Capex growth (previously expected at 11%) to build out AI capacity.
Stock market reaction further confirmed the perceived importance and impact of AI: Microsoft shares jumped 9%, Meta’s by 10–11% after the earnings call, adding hundreds of billions in market value. This performance was widely interpreted by analysts as direct evidence that AI investments are now translating into real business results, not just speculative future potential
Meta’s long-term vision stresses personal super intelligence as its AI goal, and company leaders say their results prove that AI is now an essential lever of both revenue growth and competitive advantage.
AI was the central driver behind the revenue and profit beats.
AI contributed to better monetization (especially for Meta’s ad business and Microsoft’s Azure division).
ROI has been demonstrated on AI.
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
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