New York, Jan 29, 2026, 17:10 EST — After-hours
Microsoft dropped roughly 10% in after-hours trading Thursday, weighed down by a surge in AI infrastructure expenses revealed in its latest earnings. Meta Platforms climbed about 10%, buoyed by a positive outlook. Microsoft last traded at $433.50, while Meta stood at $738.31.
The split highlighted that Wall Street continues to back AI growth, but not blindly. “Microsoft’s close relationship with OpenAI supports its lead in enterprise AI, yet it also brings concentration risk,” said Zavier Wong, a market analyst at eToro. Investors zeroed in on OpenAI’s weight in Microsoft’s contracted cloud backlog. (Reuters)
This matters because a few megacaps linked to AI dominate the major indexes, leaving little margin for guidance missteps. “Investors want to hear that capital spending … is going to continue, and they see very visible monetization,” said Anthony Saglimbene, chief market strategist at Ameriprise Financial, referring to the clear conversion of AI products into revenue and profit reflected in earnings. (Reuters)
Microsoft’s capital spending soared to a record $37.5 billion in the December quarter, marking a nearly 66% jump from the previous year. This outlay—covering data centers, servers, and chips—came as Azure revenue climbed 39%. The company forecasts 37% to 38% growth for the January-March period. “A little bit of revenue isn’t enough to cover the costs,” said Eric Clark, portfolio manager of the LOGO ETF. Microsoft also revealed a cloud backlog of $625 billion, with roughly 45% linked to OpenAI. CEO Satya Nadella noted the company faces a tough choice between allocating new chips for internal projects or for external clients. (Reuters)
Meta pushed spending limits higher, betting investors will accept the boost as its core business stays strong. CEO Mark Zuckerberg told analysts 2026 will be “a big year” for rolling out “personal superintelligence.” The company projected capital expenditures between $115 billion and $135 billion for 2026, fueled by a 24% jump in fourth-quarter ad revenue to $58.14 billion and a first-quarter revenue forecast that beat estimates. John Belton, portfolio manager at Gabelli Funds, said Meta’s valuation “is really not that demanding,” noting cash flow continues to come from ads, even as the company ramps up its AI investments. (Reuters)
Behind the scenes, traders are grappling with whether AI growth is moving past just one dominant player. “The tailwinds from AI demand are starting to broaden beyond Nvidia,” said Louise Dudley, portfolio manager at Federated Hermes, as investors looked closely at chipmakers and hardware suppliers for data centers and AI servers. (Reuters)
Nvidia shares edged up roughly 0.5% to $192.51 after CEO Jensen Huang revealed that licensing deals for its H200 chip in China are “being finalised.” He expressed hope that Beijing will reach a “favourable decision.” Export controls continue to loom as a key wildcard for AI chip stocks, despite robust demand. (Reuters)
Amazon slipped roughly 0.5% to $241.73 following a Reuters report that the company is in early discussions to invest “dozens of billions” in OpenAI, with potential commitments reaching $50 billion, according to a source. The talks remain preliminary and no final figures have been set, Reuters added. Amazon declined to comment, while OpenAI did not respond immediately. (Reuters)
Rates remain a key concern behind the AI trade, as lofty valuations react sharply to any move in borrowing costs. The Federal Reserve kept rates unchanged on Wednesday, offering scant clues on the timing of future cuts. Matthias Scheiber from Allspring Global Investments warned that the AI-driven surge in investments might push inflation to stay elevated longer this year. (Reuters)
The downside scenario is gaining traction: overspend too quickly, and the costs hit before revenue ramps up. A Reuters Breakingviews column flagged risks that a surge in AI capex might leave behind excess infrastructure and higher debt burdens if demand stalls. On top of that, margin pressures could mount as newer AI competitors intensify the fight.
Traders now turn to the rest of Big Tech to see if their cloud growth keeps pace with expansion efforts. Alphabet is set to report on Feb. 4, followed by Amazon on Feb. 5. Investors will be watching closely for updates on AI spending and any early signs of returns from their cloud investments. (Alphabet Investor Relations)
