MSFT & Meta Preview: Real Test of AI Monetization

After the U.S. market closes on January 28, two AI heavyweights — Microsoft and Meta — will report their fourth-quarter and full-year 2025 results. Investor attention is firmly on Microsoft’s Azure cloud business and AI’s contribution to Meta’s advertising engine.

Another key concern is whether massive corporate capital spending will begin to deliver visible returns. While AI monetization is already underway, investors question whether revenue growth can keep pace with soaring capex. Data centers also depreciate rapidly, raising doubts over whether cash flows can outrun asset write-downs over time.

Microsoft: Azure in the Spotlight

For Microsoft, the market expects revenue of $80.23 billion, up 15.2% year over year, and earnings per share of $3.88, a 20.1% increase.

One month into 2026, Microsoft’s share price has been relatively flat and has underperformed the Nasdaq, adding pressure on management to deliver a strong narrative.

The core focus is Azure, particularly new bookings and remaining performance obligations (RPO). With OpenAI increasingly distancing itself from Microsoft and competitors like Google’s Gemini rapidly catching up, CEO Satya Nadella must demonstrate that Microsoft retains strong independent customer pull.

Beyond cloud, investors will watch Copilot’s adoption and monetization rates. Meanwhile, amid sharp increases in storage costs, it remains to be seen whether Microsoft will raise prices in its PC and gaming segments, or absorb the higher costs internally.

Meta: AI Fuels Advertising Momentum

Turning to Meta, revenue is expected to reach approximately $58.45 billion, up around 21% year over year, with EPS of $8.21, a modest 2.5% increase. Meta’s stock performance this year has broadly tracked the Nasdaq.

Meta’s business is more straightforward, with investor focus centered on AI-driven gains in advertising efficiency. Advertisers continue to ramp up spending within Meta’s ecosystem, benefiting from increasingly powerful AI recommendation systems and a social moat built on over 3 billion active users.

Recently, reports suggest Mark Zuckerberg has acknowledged that the metaverse was overhyped, leading Meta to cut more than 1,000 jobs in its Reality Labs division to improve efficiency. The market has reacted positively, viewing the move as a meaningful step toward cost discipline and a potential tailwind for the stock.

Within Reality Labs, the most closely watched product remains AI-powered smart glasses, widely seen as the next major AI interface beyond smartphones. With tech giants racing into the space, Meta is considered a category leader — leaving investors eager to see whether any new surprises emerge.