Meta and Microsoft stocks plunge as $70B+ AI spending worries investors

Meta and Microsoft shares tumbled Thursday after both tech giants announced plans to significantly increase AI spending, sparking investor concerns that artificial intelligence investments may be overhyped. The selloff sent the tech-heavy Nasdaq down 1.3% and highlighted growing market skepticism about whether massive AI expenditures will deliver proportional returns.

The big picture: Wall Street is beginning to question the AI spending spree that has defined Big Tech’s strategy, with investors demanding clearer evidence of returns on investment.

• Meta’s stock plunged 11.5% despite strong earnings, overshadowed by the company’s announcement to increase 2025 capital expenditures to $70-72 billion, up from a previous range of $66-72 billion.
• Microsoft fell 3.4% after reporting a $3.1 billion decrease in net income in the first quarter due to its massive OpenAI investment.

Key spending commitments: The scale of AI investments across major tech companies continues to escalate dramatically.

• Meta has already made headlines this year by taking a nearly $15 billion stake in Silicon Valley startup Scale AI, bringing over its 28-year-old CEO Alexandr Wang to run Meta’s Superintelligence Labs.
• Microsoft has pledged $13 billion to OpenAI, the company behind ChatGPT, since 2019, with $11.6 billion already funded as of September, holding about 27% of the company valued at $135 billion.
• Google parent Alphabet also hiked its spending forecast to $91-93 billion on Wednesday.

What they’re saying: Tech CEOs remain confident in their AI investment strategies despite market concerns.

• “It’s pretty early, but I think we’re seeing the returns in the core business,” Meta CEO Mark Zuckerberg said during Wednesday’s earnings call. “That’s giving us a lot of confidence that we should be investing a lot more, and we want to make sure that we’re not underinvesting.”
• Microsoft CEO Satya Nadella defended the OpenAI partnership as “one of the most successful partnerships and investments our industry has ever seen,” adding: “We continued to benefit mutually from each other’s growth across multiple dimensions.”

Financial maneuvering: Meta is preparing for potentially record-breaking fundraising to support its AI ambitions.

• The social media giant has received about $125 billion worth of orders for a potential bond sale, breaking the record for most ever offered, according to sources.
• Meta is looking to raise at least $25 billion from the sale, with Citigroup and Morgan Stanley reportedly involved in the deal.

Why this matters: The market reaction signals a potential inflection point where investors are demanding concrete evidence that AI spending will translate into meaningful revenue growth, not just technological advancement.