These Aren’t Your Grandma’s Incumbents

Inside Microsoft and Meta’s AI-fueled Q1 performance

Big Tech is still throwing punches - even with one hand tied behind its back. 👊

If you’re wondering why markets are up today, here’s the honest answer:
no one ever truly knows.

Source: XKCD

But here’s the next-best answer:
Microsoft and Meta blew the roof off earnings last night and were rewarded with a big stock price jump today

🟦 Microsoft ($3.2T) is up ~7.6%
🟪 Meta ($1.5T) is up ~4.2%

When companies that size move, the whole market follows. Their gravity pulls everything else into orbit.

So what happened?

🟦 Microsoft: The $3.2T ✨Cloud-and-Copilot✨ Empire

• 📈 $70.1B in revenue (+13% YoY) and $25.8B in profit (+18%). Azure up 33%.
  🏗️ After 10 straight quarters of pedal-to-the-metal AI capex, Microsoft tapped the brakes, just slightly. Capex declined QoQ from $22.6B to $21.4B. It’s not a slowdown; it’s a strategic shift. From land grab to landscaping. From building everything, everywhere, all at once - to allocating spend based on real demand signals: geography, workload efficiency, customer pull-through. The market likes that.

• 🤖 Copilot usage is scaling (55% growth in enterprise customers QoQ, DAUs +2x). Azure AI workloads are contributing 16 points of its 33% growth. Infra spend is translating to customer pull-through.

• 🐶 Satya Nadella says 30% of Microsoft’s own code is now AI-generated. Kevin Scott predicts that number hits 95% within five years. Microsoft is dogfooding AI harder than anyone, and in doing so, reshaping how software is built and sold.

➡️ From silicon (Maia), to models (OpenAI), to infra (Asure AI), to end-user interfaces (Copilot), Microsoft is executing an Apple-style vertical strategy, only scaled for global enterprise.

🟪 Meta: The $1.5T ✨Ad-and-Algorithm✨ Engine

• 📈 Revenue: $42.3B (+16% YoY). Net income: $16.6B (+35%). $50B stock buyback announced (yes, billion with a B)

• 🏗️ Capex guide raised to $64–72B for the year. A big chunk is going to custom silicon and data centers optimized for AI. Meta has been relatively quiet about chips, but they’re building a full vertical AI pipeline as well. Think Microsoft, but for consumers.

• 📦 While everyone else is chasing monetization, Meta is chasing usage. They’re not trying to sell AI tools. They’re trying to make sure you use Meta platforms 10% more per day. So yes: Meta is spending aggressively.
  But they’re doing it with a consumer flywheel and ad engine that already converts attention into dollars. They don’t need to prove that AI has economic value. They just need to prove that AI can deepen engagement. The rest takes care of itself.

➡️ We’re used to thinking of Meta as an ads business wrapped in a social network. But increasingly, it’s an LLM company with a multi-billion-user training pipeline.

Even with constraints - AI infra bottlenecks, regulatory landmines, macro uncertainty - Big Tech is playing from a structurally advantaged position. They have data, distribution, capital, user base, and the luxury of not needing to monetize AI today to justify the spend.

These aren’t your grandma’s incumbents. They move like startups, but with trillion-dollar tailwinds. 🌪️