Tech giants Meta Platforms (META) and Microsoft (MSFT) both reported December quarter results on January 28. Meta impressed investors with a stronger-than-expected sales outlook for Q1FY26, while Microsoft’s slower cloud growth and softer margin guidance disappointed. Subsequently, META stock is rallying in pre-market trading and MSFT shares are dropping. Despite the different investor perspectives, Wall Street remains bullish on the long-term prospects of both companies, assigning a “Strong Buy” consensus.
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Meta’s Blockbuster Results
Meta Platforms, owner of Facebook and Instagram, beat analysts’ Q4FY25 expectations with earnings per share (EPS) of $8.88, surpassing the $8.23 consensus estimate. Revenue jumped 24% year-over-year to $59.89 billion, exceeding the $58.59 billion forecast.
Additionally, Meta’s daily active people (DAP) on its social media apps totaled 3.58 billion, meeting estimates. Meta forecast 2026 total expenses between $162 billion and $169 billion, with a big chunk allocated to its AI initiatives and infrastructure expansion.
Microsoft’s Azure Growth Disappoints
Microsoft’s adjusted EPS hit $4.14, surpassing the $3.91 consensus estimate. Revenue reached $81.27 billion, up 17% year-over-year and topping the $80.31 billion forecast. However, its Intelligent Cloud division, including Azure, reported sales of $32.9 billion, modestly beating the consensus of $32.2 billion, while analysts had expected a higher beat.
Microsoft is grappling with AI capacity constraints as demand surges faster than supply, capping near-term revenue potential. To tackle this, CFO Amy Hood highlighted last year’s $88.2 billion in capital spending and announced plans for a substantial increase in fiscal 2026.
META Wins Analyst Price Target Boosts
Wells Fargo analyst Ken Gawrelski lifted his META price target from $754 to $849, implying nearly 27% upside potential. He noted that the upbeat revenue guidance, with notable Q1 acceleration, offsets elevated OpEx and CapEx projections. Earnings estimates for 2026/2027 remain steady, though stronger growth should support an expanded multiple.
Moreover, Morgan Stanley analyst Brian Nowak raised his price target to $825 (from $750), suggesting 23.4% upside potential. He boosted Meta’s FY27 EPS estimate by 10%, citing Meta’s investments in engagement and monetization. Nowak highlighted that these efforts are fueling the fastest growth in over four years, when the business was roughly half its current size.
Also, Jefferies analyst Brent Thill boosted his price target from $910 to $1,000, implying 49.5% upside. He noted that Meta delivered strong revenue upside, with AI-driven growth reacceleration validating returns on its massive investment cycle. Thill added that Meta provided several data points showing AI powering its core business flywheel.
Analysts Trim MSFT Price Targets
Wells Fargo analyst Michael Turrin cut his price target from $630 to $615, implying 27.7% upside potential. Despite Azure capacity constraint concerns, Turrin views the Q3 guidance as signaling improved growth potential in the second half of 2026 and beyond with added capacity.
Similarly, Citi analyst Tyler Radke lowered his price target to $635 (from $660), implying 31.8% upside. He stated that Azure showed slight upside but growth slowed marginally due to capacity allocation prioritizing first-party services. While Radke trimmed Azure estimates post-earnings, he highlighted accelerating momentum for Copilot.
Meanwhile, Morgan Stanley analyst Keith Weiss maintained his $650 price target but removed Microsoft stock from his “Top Pick” list. He noted that investor focus zeroed in on GenAI indicators like Azure growth (38% cc, just 1 point above guidance) and M365 Commercial Cloud, missing hopes for a 2%-3% beat.
Which Is Better: Meta or Microsoft?
Based on TipRanks Stock Comparison Tool, both Meta and Microsoft have a Strong Buy rating, with META shares offering a modestly higher upside potential over the next twelve months. META also has a higher TipRanks Smart Score of eight, which implies it can outperform market expectations.
