Summary
Microsoft and Meta both increased their spending on AI, but their stock prices reacted differently. While Microsoft saw a significant drop, Meta's stock went up as investors believe its AI investments will boost its advertising revenue. This shows how investors are assessing the potential of AI investments in terms of immediate and future returns.
Key Facts
- Microsoft increased its AI spending, but its stock fell by nearly 12%.
- Meta's stock price rose as it announced over $115 billion in AI spending for the year.
- Microsoft's cloud revenue grew by 39%, but this growth was mainly from non-AI services.
- Investors are concerned about the value of software companies due to the rise of AI.
- Meta's strong advertising revenue helps offset concerns about its large AI investments.
- Analysts use discounted cash flow models to estimate company values based on future cash.
- Meta's AI investments are seen as contributing positively to its future cash flow.
- Microsoft's AI spending is viewed as risky due to uncertain and delayed returns.
