Tech Giants Diverge

The latest earnings season has delivered a fascinating snapshot of the technology sector’s current state, with three of the most closely watched companies revealing different trajectories. Meta Platforms emerged as the clear winner, posting record results and announcing a bet on artificial intelligence that sent its stock surging. Microsoft delivered solid numbers but faced investor scepticism over slowing cloud growth, while Tesla confronted the harsh reality of declining electric vehicle (EV) sales by changing aggressively toward robotics and autonomous driving. Together, these results paint a picture of an industry at a crossroads, where massive AI investments are reshaping corporate strategies and investor expectations.

Meta’s AI Moonshot Wins Wall Street’s Approval

Meta Platforms dominated the earnings spotlight with a performance that exceeded even the most optimistic forecasts. The company reported Q4 revenue of $59.9 billion, representing a strong 24% increase from the prior year, while earnings per share of $8.88 comfortably beat analyst estimates. The strength came from Meta’s core advertising business, which continues to fire on all cylinders. Ad impressions surged 18% year-over-year (YoY), while the average price per ad climbed 6%, creating a powerful dual engine of growth. The company’s family of apps now reaches 3.58 billion daily active users, up 7% from a year ago.

However, the real story lies not in the quarterly results but in Meta’s vision for the future. CEO Mark Zuckerberg announced that the company would increase its capital expenditures by as much as 73% in 2026, committing between $110 billion and $135 billion to build AI infrastructure aimed at achieving “personal superintelligence.” This represents one of the most aggressive corporate bets on AI to date, signalling that Meta is willing to sacrifice short-term profitability to secure a leadership position in the next wave of computing.

Microsoft’s Cloud Deceleration Raises Questions

While Meta is popular amongst investors, Microsoft faced a more sceptical reception despite delivering results that beat expectations. The company reported Q2 revenue of $81.3 billion, up 17% YoY, and earnings per share (EPS) of $4.14, which exceeded expectations. Microsoft’s intelligent cloud segment, which houses its critical Azure business, brought in $32.9 billion, surpassing forecasts. For the quarter, total Microsoft cloud revenue crossed the $50 billion mark, a testament to the enduring strength of the company’s cloud franchise.

The source of concern was Azure’s 39% growth rate, which, while impressive, represents a deceleration from previous quarters and barely edged above the 38% consensus estimate. In the high-stakes world of cloud computing and AI, investors are demanding not just growth but accelerated growth, and Microsoft’s numbers suggested that momentum may be slowing down. Adding to the unease is the intensifying competitive environment. While Microsoft has enjoyed a first-mover advantage through its partnership with OpenAI, rivals like Google and emerging AI platforms such as Anthropic are gaining traction, threatening both Microsoft’s AI business and its core software products. The company is responding with massive capital investments in AI infrastructure, but investors are growing impatient for a more immediate payoff from this spending.

Tesla’s Strategic Change from Cars to Robots

Tesla’s earnings report was perhaps the most interesting of the three companies. The electric vehicle (EV) maker posted Q4 revenue of $24.9 billion and EPS of $0.50, beating estimates. However, these modest wins were overshadowed by a troubling milestone: Tesla recorded its first-ever annual revenue decline, with full-year 2025 sales falling 3% to $94.8 billion. The automotive segment, which has long been the company’s core business, saw revenue decrease 11% in Q4 to $17.7 billion, while net income slipped 61% as operating expenses surged 39% due to heavy investments in AI and research and development.

The decline in vehicle sales reflects multiple challenges. Tesla faces fierce competition, particularly from Chinese automaker BYD, which has been aggressively expanding its market share. The company’s product lineup is aging, with the Model S and Model X dating back to 2012 and 2015, respectively. The company announced it would end production of the Model S and X entirely, converting those factory lines to manufacture Optimus, Tesla’s humanoid robot. Tesla also revealed a $2 billion investment in xAI, CEO Elon Musk’s artificial intelligence startup, as part of a broader $20 billion funding round.

Musk made it clear that Tesla’s future is no longer primarily about selling cars. “We’re really moving into a future that is based on autonomy,” he declared on the earnings call, signalling that the company’s massive valuation is now predicated on its potential in robotics and self-driving technology. Tesla is ramping up its Robotaxi service, which is currently piloting in Austin, Texas, and plans to expand to seven additional U.S. cities in the first half of 2026. The company also announced it would unveil the third generation of its Optimus robot this quarter, describing it as the first design intended for mass production. To fund this transformation, Tesla expects to spend approximately $20 billion in capital expenditures in 2026, focusing on new factories, robotics, and AI computing resources.

AI at Any Cost 

Despite their divergent near-term fortunes, all three companies share a common strategic goal – a massive investment in artificial intelligence. Meta is committing up to $135 billion, Microsoft continues to pour capital into AI infrastructure, and Tesla is dedicating $20 billion to autonomy and robotics. The mixed market reactions reveal the delicate balance companies must strike. The strong current performance, as demonstrated by Meta, provides the credibility and financial cushion to make long-term bets. Solid but decelerating growth, as seen at Microsoft, invites scrutiny and scepticism, even when results beat expectations. And a declining core business, as Tesla is experiencing, forces a company to lean heavily on future promises, creating both risk and opportunity. For investors, the message is clear: the technology sector is undergoing a profound transformation, and the winners will be those who can successfully navigate the tension between delivering today’s results and building tomorrow’s breakthroughs.

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** This article was prepared by BROKSTOCK analyst Maboko Seabi