What happened
Microsoft and Meta Platforms both report quarterly earnings after the closing bell in New York on Wednesday, in what has become the most closely watched night of the corporate calendar. Between them the two firms are worth several trillion dollars and sit near the heart of almost every large investment fund in the world.
Wall Street expects Microsoft to post adjusted earnings of about 4.24 dollars per share on revenue near 87.6 billion dollars, up roughly 15 percent on a year earlier, powered by its Azure cloud business and its Copilot artificial intelligence tools. Meta is forecast to report earnings of around 7.20 dollars per share, driven by its vast digital advertising machine across Facebook and Instagram.
The numbers themselves are not really the question. The question is spending. Microsoft is expected to have poured more than 40 billion dollars into new data centres and chips in the quarter alone, and Meta has guided to a similar splurge. Investors want to see that money turning into real revenue rather than a bottomless pit.
Why it matters
These are not just two big companies. They are among the largest holdings in global stock markets, which means their fortunes shape the value of pensions and index funds held by millions of ordinary people who have never bought a share directly.
The wider worry is that the technology industry has spent astonishing sums building artificial intelligence infrastructure on the promise of future profits. If tonight results show customers are genuinely paying more for AI features, confidence in the whole sector strengthens. If growth disappoints, the fear is that the spending has run ahead of the payoff.
Because a handful of giant technology firms now make up such a large slice of the US market, a wobble in one or two of them can drag entire indices down. That concentration means the results of these two companies matter for savers far beyond the tech world.
Explained simply
Imagine two farmers who have spent every spare penny buying tractors, convinced a bumper harvest is coming. Tonight the market wants to see the crop, not just the machinery.
Artificial intelligence needs enormous computing power, which means giant warehouses full of expensive chips, known as data centres. Building them costs tens of billions of dollars up front, long before customers pay for the services they will eventually run.
Capital spending, often shortened to capex, is simply the money a company lays out today on long-term kit like these data centres. For the past two years the biggest technology firms have been raising their capex sharply, betting that AI will become as essential as electricity.
The tension is timing. Shareholders are patient up to a point, but they eventually want that investment to show up as extra sales and profit. Tonight is one of the moments when the market checks whether the bet is starting to pay for itself, or whether the harvest is still a long way off.
What it means for you
If you have a workplace pension or hold a global tracker fund or an S and P 500 tracker, you almost certainly own a slice of both Microsoft and Meta whether you realise it or not. Strong results tonight would tend to lift the value of those funds, while a disappointment could pull them lower in the days that follow.
For UK investors the effect comes with a currency twist. Because these shares are priced in dollars, movements in the pound against the dollar can add to or offset any gains when the value is converted back into sterling in your account.
The practical takeaway is not to trade on a single earnings night. But it is worth understanding that when commentators talk about the market rising or falling this week, a large part of the reason may simply be how these two companies performed after the bell.
The bigger picture
This earnings season is shaping up as a referendum on the AI boom. Microsoft, Meta, Apple and Amazon all report within roughly 48 hours, and together they will set the tone for markets through the rest of the summer.
The key thing to watch is not the headline profit but the language around future spending. If these firms keep raising their investment plans while promising the returns are coming, markets will stay nervous. Clear evidence that AI is lifting sales would calm those nerves and could push indices to fresh highs.
