The artificial intelligence boom has once again captured Wall Street’s imagination. Meta (NASDAQ: META) and Microsoft (NASDAQ: MSFT) triggered a stunning $500 billion rally across AI-driven companies and exchange-traded funds (ETFs) after reporting blockbuster earnings that highlighted the payoff from their massive investments in artificial intelligence and cloud infrastructure.
On Wednesday evening, Microsoft stock jumped as much as 8% in extended trading, while Meta shares surged over 12%. Together, the two companies added $440 billion in market value almost instantly. That momentum carried over to other technology leaders on Thursday, with Nvidia (NASDAQ: NVDA), Amazon (NASDAQ: AMZN), and Alphabet (NASDAQ: GOOGL) all climbing in sympathy, pushing the S&P 500 (SPX), Nasdaq Composite (IXIC), and Dow Jones Industrial Average (DJI) into fresh record territory early in the session.
A Historic Night for AI Stocks
Microsoft’s fourth-quarter fiscal results delivered a clear message: cloud computing and artificial intelligence are no longer just experiments—they are major growth engines. The company reported revenue of $76.44 billion, up 18% year over year, while net income rose to $27.23 billion, or $3.65 per share. This performance drove Microsoft’s market capitalization above $4 trillion, a milestone previously reached only by Nvidia.
Meta delivered an equally strong beat, posting revenue of $47.52 billion, up 22% from last year, and net income of $18.34 billion, or $7.14 per share. Its shares soared on the news, with investors applauding both the strength of its advertising business and its audacious AI push.
During the earnings call, Meta CEO Mark Zuckerberg said:
We do take very seriously that this is just a massive amount of capital to convert into many gigawatts of compute, which we think is going to help us produce leading research and quality products and in running the business.
AI ETFs Surge as Capital Expenditures Soar
Investors poured into AI-focused exchange-traded funds as the results rippled through the markets. The WisdomTree Artificial Intelligence and Innovation Fund (BATS: WTAI), Dan Ives Wedbush AI Revolution ETF (NYSE Arca: IVES), Roundhill Generative AI & Technology ETF (NYSE Arca: CHAT), Global X Artificial Intelligence & Technology ETF (NASDAQ: AIQ), and Global X Robotics & Artificial Intelligence ETF (NASDAQ: BOTZ) all saw significant inflows.
The bullish sentiment was fueled in part by Meta’s decision to lift its full-year capital expenditure forecast to a range of $66 billion to $72 billion, up from $64 billion to $72 billion. Microsoft, meanwhile, projected a record $30 billion in capital spending for the current quarter.
Analysts at Citi highlighted the likely downstream effects of this spending: “We believe AVGO and AMD will be the primary beneficiaries of Microsoft’s and Meta’s increased capex,” they wrote, referring to Broadcom (NASDAQ: AVGO) and Advanced Micro Devices (NASDAQ: AMD).
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Broader Market Impact
The enthusiasm wasn’t limited to the two companies. Nvidia, already the world’s most valuable company thanks to its dominance in AI chipmaking, gained 1%. Amazon added more than 2% ahead of its earnings release, while Apple (NASDAQ: AAPL) and Alphabet advanced as well. Other sectors showed mixed results—Comcast (NASDAQ: CMCSA) rallied after a solid quarter, CVS Health (NYSE: CVS) beat expectations and raised guidance, and Norwegian Cruise Line (NYSE: NCLH) reported record revenue. Qualcomm (NASDAQ: QCOM), on the other hand, slumped as concerns grew about losing Apple as a key modem customer.
The S&P 500 initially surged to a fresh record before easing slightly, while the Dow Jones Industrial Average stayed positive and the Nasdaq Composite held strong gains on the strength of its technology leaders.
A New Phase for the AI Race
While these results underscored the payoff of years of heavy AI investment, analysts also warned about the sheer scale of spending. Microsoft and Meta are devoting more than 30% of their revenue to capital expenditures this year, far above historical levels.
Barclays analysts noted that “With its strong Q4 FY25 results, MSFT confirmed its unique status in the software space and will likely continue to be one of the core holdings by investors.”
These numbers show that AI has moved beyond hype. It has become an engine of growth powerful enough to shift entire markets. For now, the tech giants’ gamble is paying off—and investors appear eager to stay along for the ride.
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