Microsoft and Meta, which released quarterly results on July 29 local time, showed diverging fortunes.

Microsoft posted higher net profit, while Meta’s net profit fell sharply. Meta shares tumbled 6.2 percent in after-hours trading, Axios reported. Microsoft rose 2.4 percent.

Meta, which owns Facebook, Instagram and WhatsApp, posted costs of $42 billion this quarter, up 55 percent. Revenue growth of 28 percent did not keep pace with the rise in costs. Net profit fell 14 percent to $15.8 billion. That was below an S&P Capital IQ forecast of $18.8 billion.

Microsoft recorded capital spending of $41 billion, up 70 percent, but net profit rose 31 percent to $35.8 billion. It also beat a market forecast of $31.5 billion.

Microsoft described the investment as "spending to support customer demand for cloud and AI services."

Meta put its capital spending outlook for this year at between $130 billion and $145 billion. It raised the lower end by $5 billion from its previous forecast and kept the upper end unchanged. Justin Post, an analyst at Bank of America, had expected Meta to cut the upper end of capital spending by about $1 billion to $2 billion after it announced plans to reduce headcount by 8,000.

Meta had 75,472 employees as of June 30, down 1 percent from a year earlier. The figure does not yet reflect the recent layoff plans.

Microsoft said in its earnings release that about two-thirds of capital spending goes to short-lived assets such as CPUs and GPUs. It said these assets will need to be replaced in the future as part of system modernisation.