Meta and Microsoft both blew their data center budgets last quarter. Wall Street is only mad at one of them. (www.businessinsider.com)

Meta and Microsoft recently reported their quarterly earnings, both surpassing revenue expectations but facing starkly different reactions from Wall Street regarding their capital expenditures (capex). Meta's investment reached $22.1 billion for the fourth quarter and $72.2 billion for the year, driven by a focus on enhancing its AI capabilities at Meta SuperIntelligence Labs. This led to a surge in Meta's stock by 9% in after-hours trading, as analysts view its spending as a strategic commitment to AI development. In stark contrast, Microsoft reported a hefty $37.5 billion in capex, predominantly for CPUs and GPUs essential for AI workloads, but the company’s stock plummeted over 6%. Investors expressed concerns over the return on investment (ROI) from such high expenditures and Microsoft's heavy reliance on OpenAI, which accounts for a significant portion of its obligations. The differing stock performances underscore the uncertainty in the AI and data center investment landscape. Microsoft's substantial GPU investments are raising alarms about their financial viability, especially given the potential for decreased lifespan and mounting debts that partners like Oracle and Nvidia are incurring amid extensive data center expansions. Meanwhile, Meta’s strategic capex, supported by strong cash reserves from its advertising business, reassures some investors about its potential for long-term AI growth. This divergence illustrates the complexities in evaluating tech giants' spending in a rapidly evolving AI market, where the promise of innovation must balance with investor expectations for returns.