Following each company's quarterly results, Microsoft (MSFT 1.00%) sold off by about 10%, while Meta Platforms (META 1.32%) rose by about 10%. The market had two entirely different reactions to each company's quarter, but was either reaction warranted?
Let's take a look at each company and decide which is the better buy today.
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Microsoft's quarter just wasn't good enough for some
While Microsoft does many different things as a business, the market really cares about one business unit in particular: Azure. Azure is Microsoft's cloud computing division and provides a glance into how strong artificial intelligence (AI) spending is. Cloud computing platforms like Azure are incredibly popular with aspiring AI businesses, as they allow clients to get up and running quickly, without having to manage the complexities of operating a data center.
NASDAQ: MSFT
Key Data Points
Management told investors to expect 37% Azure growth in Q2, yet they delivered 39%. In fact, management stated that this figure could have been higher if they utilized some of the new computing capacity brought online during Q1 and Q2 for external use versus internal.
Despite Microsoft outperforming expectations and delivering an excellent quarter overall, the stock still sold off. I think this makes for an intriguing buying opportunity.
But what about Meta?
The market was scared of Meta's spending plans
Following Meta's Q3 2025 earnings announcement, the stock cratered. So, expectations were a little bit low heading into the quarter. The biggest issue the market took with Meta's last quarter wasn't its results, as they were fantastic. Instead, they were worried about Meta's capital expenditure plans, as they informed investors that its dollar growth spend would be significantly more in 2026 than it was in 2025.
NASDAQ: META
Key Data Points
Investors finally got the final number they were looking for, and it's massive. For 2026, they expect capital expenditures of $115 billion to $135 billion, with most of that money going toward data centers. That's up from 2025's total of $72.2 billion.
The biggest concern the market has is if Meta is overleveraging themselves toward AI, and throwing money at a problem that won't have a great return on investment. However, management gave one piece of information that the market loved, stating, "Despite the meaningful step up in infrastructure investment, in 2026 we expect to deliver operating income that is above 2025 operating income."
That's huge news, as it shows that Meta will still deliver solid growth despite spending a ton and increasing operating expenses. This eased some of the market's fear toward Meta's spending plans, but the stock is still down around 10% from its all-time high, while Microsoft is down around 20%.
So, which is the better buy?
Meta's stock still looks cheaper
If you compare the head-to-head growth figures, Meta is technically doing better. In Q4, its revenue rose 22%, showing that some of its generative AI investments and the features it's integrating are making a difference on its social media platforms. Microsoft delivered 17% revenue growth companywide, which is fantastic considering its size. While I'll give Meta the edge here, the reality is that both companies are doing well.
Following the movement post-earnings, Microsoft's stock is still slightly more expensive than Meta's at 26 times forward earnings versus Meta's 24 times.
MSFT PE Ratio (Forward) data by YCharts
That's not a huge difference, so this isn't much of a factor in my final decision. With Meta growing more quickly and slightly cheaper than Microsoft, it may be the stock that many people pick between the two, which I think is a fair point. I wouldn't blame anyone for choosing Meta. However, I think the long-term growth trajectory of Azure is fantastic, and it has a bit steadier revenue stream than Meta's ad revenue flow.
It's a toss-up for which stock is a better buy, but I'm choosing Microsoft overall. However, I think both are great options right now.
