META And Microsoft (MSFT) Stocks Fall, Pulling Down S&P 500

Meta (META) and Microsoft (MSFT) stocks tumbled early in the Thursday trading session, also pulling down the S&P 500 index with them. During their quarterly earnings reports yesterday, both companies beat Wall Street’s expectations on earnings and revenue. However, executives for both companies said they expect capital expenditures to continue increasing as they continue to innovate and incorporate artificial intelligence (AI) into their services.

Meta stock fell over 4%, while Microsoft shares were down over 5% in midday trading. The S&P also took a 1.37% hit, dropping nearly 80 points. Apple (APPL) and Amazon (AMZN) also faced some whiplash from the drops, just before they released their earnings reports today. AI powerhouse Nvidia (NVDA) also took a 4% hit in an overall bearish Thursday session.

Microsoft and Meta have both dramatically increased their investments in generative artificial intelligence infrastructure. Microsoft’s capital expenditures nearly doubled from the year-ago period to $20 billion during its 2025 fiscal first quarter. Meta’s expenses rose 36% to $9.2 billion over the same period (its 2024 fiscal third quarter), according to Yahoo Finance. Furthermore, Meta’s Chief Financial Officer Susan Li says the company expects “significant capital expenditure growth in 2025.” The AI industry has had an overall positive effect on the S&P 500 despite Thursday’s struggles.

“We are very optimistic about the set of opportunities in front of us and believe that investing now in both infrastructure and talent will not only accelerate our progress but increase the likelihood of maximizing returns within each area,” Li said.

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Additionally, Microsoft Chief Financial Officer Amy Hood also said the company expects capital expenditures to increase in the current quarter. According to her, the company is ramping up investments in AI hardware in response to increased demand. “Roughly half of our cloud and AI-related spend continues to be for long-lived assets that will support monetization over the next 15 years and beyond.”

Despite the Thursday tumble, Wall Street analysts are still largely buy-in on Meta and MSFT stocks, according to Bloomberg data. Deutsche Bank analysts also said in a note Thursday that they see Meta’s AI investments already paying off. “To us, it is becoming increasingly evident that the scaled investments in core AI (and Gen AI) are having a tangible positive impact on advertising performance, driving an ever-widening gap between Meta and its peers.”