Meta, Microsoft Spark $500B Rally in AI Leaders and ETFs
Microsoft shares rose 8.7% in extended trading while Meta jumped 12.1%, adding $288 billion and $152 billion to their respective market capitalizations. The rally followed blowout earnings from both companies, highlighting the momentum behind their AI-driven growth strategies.
NVIDIA NVDA, the world's most valuable company and the dominant supplier of AI chips, gained 1%, while Amazon AMZN rose more than 2% ahead of its earnings report due today. The robust results have powered a broader surge in AI-related stocks and ETFs. While most of the ETFs in the AI space are surging, WisdomTree Artificial Intelligence and Innovation Fund WTAI, Dan IVES Wedbush AI Revolution ETF IVES, Roundhill Generative AI & Technology ETF CHAT, Global X Artificial Intelligence & Technology ETF AIQ and Global X Robotics & Artificial Intelligence ETF BOTZ stole the show.
Cloud and AI Fuel Microsoft Earnings
Microsoft's blowout fourth-quarter fiscal 2025 results were driven by its cloud computing and artificial intelligence businesses. The company is on track to join NVIDIA in a $4 trillion market cap club (see: all the Technology ETFs here).
Earnings per share came in at $3.65, which beat the Zacks Consensus Estimate by 30 cents and improved 24% from the year-ago earnings. Revenues grew 18% year over year to $76.4 billion, edging past the consensus estimate of $73.7 billion. Strong demand for Cloud services and AI infrastructure drove the performance. The software maker expects revenues of $74.7-$75.8 billion for the fiscal first quarter of 2026. It also expects Azure growth of 37% in constant currency in the fiscal first quarter.
Microsoft has been pouring billions into building its AI infrastructure and expanding its data-center footprint. Microsoft forecasts a record $30 billion in capital spending for the ongoing quarter, its largest ever for a single quarter. This has put the company on track to potentially outspend its rivals over the next year.
AI Powers Meta Platforms' Growth
Meta Platforms hit new all-time records after beating second-quarter 2025 estimates on both the top and bottom lines. Adjusted earnings per share came in at $7.14, topping the Zacks Consensus Estimate of $5.83 and increasing 38% from the year-ago quarter. Revenues grew 22% year over year to $47.5 billion and came above the estimated $44.84 billion.
Most of the growth was attributable to Meta's AI advancements in its advertising offerings, such as smarter ad recommendations and campaign automation. Meta's global daily active users on at least one of the family of services (Facebook, WhatsApp, Instagram or Messenger) increased 6% year over year to 3.48 billion as of June.
The world's largest social media platform projects revenues in the range of $47.5-$50.5 billion for the third quarter. Meta raised its 2025 capital expenditure guidance to $66-$72 billion, up from the prior outlook of $64-$72 billion. This increase reflects the company's aggressive investments in AI infrastructure and technical talent (see: all the Communication ETFs here).
AI's Unprecedented Growth
The latest earnings underscore the resilience and growth potential of AI-focused companies. While the significant capital expenditures raise questions about short-term profitability, the long-term potential of AI technologies presents substantial opportunities for growth.
The global AI market is undergoing remarkable growth, fueled by key drivers such as the widespread adoption of digital technologies, increasing awareness of AI's potential, and the rising demand for convenient online services. This rapid expansion is further propelled by major advancements in AI robotics, autonomous systems, sensor technology, computer vision, machine learning, natural language processing and generative AI.
A UN Trade and Development (UNCTAD) report projects the global AI market to soar from $189 billion in 2023 to $4.8 trillion by 2033, representing a 25-fold increase in just a decade.
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