Meta Fell 10%. Microsoft Didn't Blink.

Summary

Meta fell 10% after raising CapEx guidance without clear ROI, while Microsoft gained on strong Azure growth and maintained CapEx discipline. Chris Galipeau argues the broader AI CapEx boom is still in its second inning, not a bubble, as companies across all sectors are adopting AI. However, free cash flow depletion and heavy borrowing by Big Tech raise concerns if the AI payoff does not materialize.

• Meta stock dropped 10% after it raised CapEx guidance and delivered a soft Q3 revenue outlook without tangible ROI proof, putting it in the penalty box.
• Microsoft outperformed thanks to super strong Azure growth, confident management tone, and unchanged CapEx guidance, signaling AI revenue and spending discipline.
• Galipeau says the AI buildout is only in its second inning: use cases are real, and companies across all sectors are demonstrably improving efficiency and operating income with AI.
• Big Tech firms are blowing through free cash flow and raising debt to fund AI CapEx, a concern that has caused investors to ‘call timeout’ on spending without clear returns.
• The host raised doubts about Meta’s ability to catch up in LLMs given poor initial reception and Chinese competition, adding to the burden of proof on its AI spend.