Tech titans diverge: Meta tanks, Microsoft dips, Alphabet soars after Q3 earnings show AI spending split

Meta sinks on $16B Trump tax hit, Microsoft slips despite strong AI gains, Alphabet rallies as AI bets pay off.

The share prices of Meta, Microsoft, and Alphabet moved sharply in different directions on Wednesday after the three tech bellwethers reported their third-quarter results, reflecting how the ongoing AI investment race is reshaping fortunes across Silicon Valley.

While Meta’s stock plunged more than 8 percent after taking a massive one-time charge linked to US President Donald Trump’s new tax law, it ended 7.4 lower at $696.30/share.

Microsoft slipped 3–5 percent despite robust cloud profits to end 4 percent lower at $519/share.

In contrast, Alphabet shares surged nearly 7.5 percent as the Google parent’s AI push delivered its strongest growth in over a year. Alphabet ended at $274.57/share, up 2.7 percent.

Meta’s third-quarter earnings beat revenue expectations but missed on profits due to a $16 billion tax-related charge tied to Trump’s 'Big Beautiful Bill.' The company also warned that capital expenditure in 2026 will rise significantly as it ramps up investment in AI infrastructure.

“Our current expectation is that capital expenditures will be notably larger in 2026 than in 2025,” CFO Susan Li said, pointing to growing costs from data centers, cloud infrastructure, and AI hiring.

Revenue jumped 26 percent year-on-year to $51.24 billion, Meta’s best growth since early 2024. But the steep spending trajectory unsettled investors, pushing the stock lower. Shares are still up 27 percent year-to-date, trailing rival Google’s 43 percent gain.

CEO Mark Zuckerberg reaffirmed his commitment to AI-powered products, from Ray-Ban Meta smart glasses to the Quest 3 headset, as Meta continues its pivot beyond social media into AI hardware and engagement.

Microsoft’s shares fell up to 5 percent in after-hours trading, even as it posted $77.7 billion in revenue and a 22 percent rise in quarterly profit to $30.8 billion. The company’s Azure cloud business and AI integrations once again outperformed expectations, but analysts flagged concerns over slower AI spending and tightening margins.

Traders described the sell-off as a “valuation reset,” with the stock slipping from $430 to below $410 amid heavy institutional trading. Microsoft’s results underscore how AI optimism remains high but investor patience is thinning, especially as Big Tech’s capital expenditure soars.

The results sparked renewed debate about whether the AI trade is entering a consolidation phase, with investors rotating from high-growth tech into value and cyclicals.

In sharp contrast, Alphabet shares jumped 7.5 percent after reporting $87.5 billion in sales, topping Wall Street’s $85.1 billion estimate, as per Bloomberg. The company’s cloud revenue soared 33.5 percent year-on-year to $15.2 billion, while profits hit $2.87 per share, easily beating expectations.

It also marked a historic milestone, with total revenue surpassing $100 billion for the first time, driven by broad-based growth in search, cloud, YouTube, and AI products.

The company’s sales rose to $102.3 billion, up from $87.5 billion a year earlier, while net income jumped to $2.87 per share, comfortably beating Wall Street estimates.

Nice work!

— Elon Musk (@elonmusk) October 30, 2025

CEO Sundar Pichai said Alphabet’s AI products are now “driving real business results,” with AI-related revenue up more than 200 perecent year-on-year. The company’s flagship model Gemini has been integrated across Google Search, Ads, and Cloud, helping fuel growth even amid stiff competition from OpenAI and Microsoft.

Alphabet’s capital expenditure forecast was raised to $91–93 billion, up from $85 billion earlier, as it pours billions into data centers and AI chips. Yet, unlike Meta, investors rewarded Google for turning those investments into tangible growth, particularly through its profitable Cloud and Search divisions.