META/MSFT 2Q25:Different Evidence of AI Acceleration

META and MSFT once again exceeded market expectations, allaying widespread concerns about CAPEX increases eroding gross margins by delivering accelerating revenue growth and continued OPEX optimization that stabilized profit margins.

This marks our third consecutive quarter of accurately predicting both META and MSFT's direction, including 1Q25 when all research firms were bearish, and this quarter's 2Q25 when consensus was concerned about high expectations.

Each of our precise predictions was based on extensive detailed research. For instance, our channel checks before 1Q25 consistently showed Azure and Copilot underperforming expectations until the reversal in 1Q25.

META Earnings Highlights

• Revenue grew 22%, exceeding Bogey expectations of 16-17%.

• 3Q25 revenue guidance at high end indicates 24% growth, continuing acceleration and far exceeding Bogey's 16-17%.

• While raising CAPEX guidance floor by $2Bn, lowered OPEX guidance floor by $1Bn, demonstrating META's ability to drive cost efficiencies through AI while investing in AI infrastructure.

• CAPEX Super Bullish: "we currently expect another year of similarly significant capital expenditures dollar growth in 2026 as we continue aggressively pursuing opportunities to bring additional capacity online to meet the needs of our artificial intelligence efforts and business operations." Assuming similar absolute dollar growth, this implies CY2026 CAPEX could reach $90Bn or even $100Bn.

MSFT Earnings Highlights