Amid slower growth expectations, Microsoft and Meta shares fall

Both Microsoft and Meta beat market expectations in their September quarter earnings. However, investors are concerned about their continued rising spending on AI, weighing on growth prospects. Microsoft and Meta reported September quarter earnings that beat market expectations but failed to impress investors with their guidance, and both stocks fell more than 3% in after-hours trading. Meanwhile, the two Wall Street darlings faced different specific challenges to Microsoft’s capacity constraints and Meta’s overspending.  Both artificial intelligence-focused businesses have invested heavily in AI infrastructure, raising concerns about whether their growth rates can justify the multibillion-dollar costs.

Shares of Microsoft are up 16% year-to-date, and Meta shares are up 68% this year as markets close Wednesday. They were not satisfied with their conservative view of the continuing challenges facing investors.