Meta reassures investors despite rising costs while Microsoft disappoints with cloud growth

29 January 2026

If you are covering the latest financial results from Meta or Microsoft, please find below comments from Ben Barringer, head of technology research at Quilter Cheviot:

Meta Platforms

"Meta has delivered a reasonably strong set of numbers, with revenue up 24%, driven by solid engagement and better-than-feared pricing. What really stands out, though, is the guidance with next quarter's growth coming in at 26-34%, which is very robust and should go a long way to rebuilding confidence after a difficult six months. Profitability is predicted to be flat as costs go up, but this suggests that Meta believes it can spend more to grow faster.

The market has been worried that growth was beginning to peter out while operating costs once again spiralled. However, it is a reality of AI that senior engineers and executives are in demand and thus cost a large amount to secure the services for. Meta is in a solid position to take advantage of the AI opportunities and investors should have confidence that costs, while higher, should remain under control this time.

AI is clearly enhancing the consumer experience and, crucially, improving advertising effectiveness through better targeting for Meta. Social media is evolving beyond simply pictures and video into a more immersive platform, and Meta is pushing this hard with virtual reality and considering the consumer experience more. Having been a relatively poor performer over the past six months, this could mark a turning point. Growth prospects now look stronger than Google's, and Meta appears to be taking share of the advertising space as a result."

Microsoft

"Microsoft's results were more lacklustre. Revenue growth of 17% is solid, but Azure's 38% growth failed to accelerate, which is what the market had been hoping for. While demand for AI far outstrips supply and capacity is clearly coming online, that hasn't yet translated into stronger Azure growth.

"A key point is that data-centre investment isn't solely about Azure, which is perhaps what the market had originally thought. Microsoft is investing heavily in Copilot and other AI enhanced solutions, so cloud computing is no longer the only game in town for it, and the capex deployment is reflecting that. Investors will be hoping that Microsoft doesn't take its eye off the ball with Azure and leave it exposed to competitors taking greater share.

"For investors, there is also the spectre of OpenAI looming and just how much exposure Microsoft has to the fortunes of that business. Microsoft is heavily exposed to OpenAI and remains very supportive of the company. However, there will inevitably be concerns around the return on its investment given AI remains a great unknown. Microsoft would argue that it is not tied solely to OpenAI when it comes to the AI developments, with 55% of its growth coming outside of the company, but regardless it does remain a risk.

"For now, the long-term opportunity remains compelling, but in the near term, the numbers didn't quite live up to elevated expectations."