NEW YORK, July 31, 2026, 04:21 EDT — Premarket trade has begun on Nasdaq, with standard hours starting at 09:30 EDT.
Microsoft NASDAQ:MSFT increased its market capitalization by almost $450 billion on Thursday, marking a new record. Meta Platforms NASDAQ:META saw an estimated drop of approximately $120 billion, according to an initial assessment.
The split was not due to differences in sales growth. Meta reported a 28% increase in revenue, while Microsoft posted an 18% rise.
Repricing was led by cash conversion. Microsoft generated free cash flow 25 times higher than Meta, with just 32% greater stated capital expenditure. The total change in market value neared $570 billion, though this is an initial calculation.
The end-of-day tape reflected the adjustment.
| Thursday close | Microsoft | Meta |
|---|---|---|
| Share price | $451.10 | $539.03 |
| One-day move | up 15.51% | down 7.95% |
| Market value | $3.35 trillion | About $1.37 trillion |
| Market-value change | up nearly $450 billion | down around $120 billion |
Meta’s loss and the total shift are initial estimates using closing figures.
Microsoft’s rally lifted the wider market. The Nasdaq advanced 2.78%, the S&P 500 improved by 1.66%, and the Dow climbed 1.19%.
Microsoft posted higher revenue and earnings. Meta saw stronger growth but a drop in operating profit. Both companies’ reporting periods concluded June 30. Microsoft released financials for its fiscal Q4, while Meta reported calendar Q2 figures.
| Quarter ended June 30 | Microsoft | Meta |
|---|---|---|
| Revenue | $90.01 billion | $60.80 billion |
| Revenue growth | 18% | 28% |
| Operating income | $40.60 billion | $18.78 billion |
| Operating margin | 45% | 31% |
| GAAP EPS growth | 32% | −13% |
| Reported capital spending | $41.00 billion | $31.08 billion |
Meta’s margin decline was not driven only by increased AI-related expenses. The quarter also recorded $2.40 billion in legal charges and $1.18 billion in severance expenses.
Despite that backdrop, the cash shortfall persisted. Nearly all of Meta’s operating cash flow was used up by its capital expenditures, while Microsoft maintained a substantially higher buffer.
| Cash conversion | Microsoft | Meta |
|---|---|---|
| Operating cash produced | $55.40 billion | $31.86 billion |
| Declared capital expenditure | $41.00 billion | $31.08 billion |
| Available free cash | $19.60 billion | $0.784 billion |
| Free-cash-flow as margin | 21.8% | 1.3% |
| Capital spend per operating cash flow | 74.0% | 97.6% |
| Free-cash-flow shift, year-over-year | −23% | −91% |
Ratios use figures reported by the company. Free-cash-flow levels did not see improvement. Investors favored Microsoft’s residual cash reserves rather than overall growth in cash flow.
Microsoft reported improved demand outlook, with commercial remaining performance obligations rising to $678 billion, an increase of 84%. Without OpenAI contributions, the growth was 25%.
Azure posted a 43% gain in revenue. Microsoft forecasts roughly 45% growth in constant currency for the current quarter. More than 30 million paid seats for Microsoft 365 Copilot were reported. Chief Executive Satya Nadella stated customers could “turn tokens into business results.” Microsoft
Zacks Investment Management chief market strategist Brian Mulberry attributed the gains to “the cloud and AI divisions.” The average target price increased to $560.90 after nine brokerages raised their estimates. Reuters
Meta’s ad business maintained strong momentum. The number of ad impressions climbed 14%, and the average cost per ad grew by 12%. Daily active users totaled 3.60 billion, a rise of 3%.
Meta’s strategy for profits from AI was more ambiguous. Executives mentioned enterprise services and compute sales but did not provide specific figures for short-term income. Josh Gilbert, lead analyst for Asia-Pacific at eToro, said Meta was “spending like a hyperscaler without a hyperscaler’s business model.” Reuters
Expenditure will remain elevated. Microsoft projects over $50 billion in capital spending for the first quarter. Its forecast for calendar-2026 stands at roughly $175 billion following the lease reclassification. Meta reduced its 2026 projection to between $130 billion and $145 billion, and set third-quarter revenue guidance at $61 billion to $64 billion.
Microsoft also surpassed a significant milestone. Previously, Nvidia NASDAQ:NVDA set the record with a $441 billion increase on April 9, 2025.
Risks: Microsoft forecasts an increase in capital expenditures for fiscal 2027. Meta notes that youth-focused legal proceedings in the U.S. might lead to a significant loss. A potential weakening of AI demand would challenge their investment strategies.
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