Another busy day of megacap technology earnings kicks off Wednesday with results from Meta Platforms and Microsoft after the bell. Capital expenditures remain top of mind for investors this reporting season after concerns about the payoffs from artificial intelligence investments dented sentiment and pressured the behemoths earlier this year. Those concerns haven’t dissipated, with D.A. Davidson analyst Gil Luria noting that capex figures are the “best indicator of NVDA demand.” Citi’s Ronald Josey thinks that these projections could, however, come in on the conservative side. Wall Street expects Meta Platforms to post third-quarter earnings of $5.25 per share, up from $4.39 a year ago, per LSEG. Revenue is expected to come in at $40.29 billion, reflecting 18% year-over-year growth. For Microsoft, EPS and revenue are expected to reach $3.10 and $64.51 billion, respectively, for the fiscal first quarter . The revenue estimate implies about 14% growth from the year-ago period. Meta Platforms For Meta Platforms, analysts are hunting for signs that AI is continuing to boost the company’s core product and advertising spending. Citi’s Josey named it a top pick due to strong engagement trends, profitability and a growing suite of products. Evercore ISI’s Mark Mahaney expects the social media behemoth to top estimates in part due to a strong internet advertising environment. He also views Wall Street’s operating margin expectations as “reasonable.” The firm also expects the company to maintain its full-year 2024 total expense and capital expenditure guidance, anticipating that Meta will refrain from offering up a 2025 outlook. META YTD mountain Shares this year Rosenblatt’s Barton Crockett views the high end of Meta’s third-quarter guide as attainable due to ongoing tail winds from AI innovation and a lift to advertising return on investment. He noted that the company has met or come within 1% of the high end of its next quarter guide over the last year and a half. “Meta has replaced Google as the set-it-and-forget-it blue chip holding offering investors (1) a growing, healthy core business, (2) an AI winner story with lower terminal risk, and (3) a shareholder friendly management team,” wrote Bernstein’s Mark Shmulik. The analyst reiterated his outperform rating and boosted his price target to $675 a share, reflecting about 14% upside from Tuesday’s close. Shmulik views market concerns surrounding capex as “overdone,” saying that the company can post a solid return on invested capital even as it boosts investments. Along with new AI tools and higher advertising spending, Bank of America’s Justin Post anticipates upside from growing Reels and messaging monetization. Political advertising ahead of the election cycle may also drive 100 to 200 basis points of upside, he added. Microsoft Microsoft faces a tougher bar headed into the print, with many analysts leaning toward caution as the company lags some of its megacap peers and underperforms the Nasdaq Composite. The company’s shares have gained about 16% this year, while the Nasdaq has soared nearly 25% and hit new highs as of late. Earlier this month, BMO Capital Markets removed the stock from its top picks list, citing limited upside over the short run. Capex and commentary surrounding AI monetization and insight into Azure’s reacceleration will be in focus as investors demand more signs of a payoff. “Feedback for M365 Copilots remains muted, which we think limits revenue upside for PBP (pre re-classification),” wrote BMO analyst Keith Bachman. “Also, we think elevated capex and depreciation will limit margin expansion, as we have previously written.” Citi’s Tyler Radke trimmed the firm’s price target on the stock to $497 from $500 a share, representing 15% upside from Tuesday’s close. He views the report as a potential “clearing event” for the stock given the lackluster expectations heading into the print. MSFT YTD mountain Microsoft year-to-date performance In fact, dour sentiment and share underperformance create an attractive setup for the company as Azure growth and demand stabilize, said Morgan Stanley’s Keith Weiss. “We remain confident in the magnitude of estimate upside driven largely by Azure, as traditional workload growth appears more de-risked following the volatility of last quarter and the AI demand is firmly building ahead of the F2H capacity unlock,” Weiss wrote. Goldman Sachs analyst Kash Rangan also remains optimistic on the stock and lifted capex estimates, saying the company is accurately “matching investments with tangible demand.” Segment changes at the company also lower the stakes for Azure’s reacceleration. The analyst maintained his $500 price target and buy rating, reflecting nearly 16% upside from Tuesday’s close. He’s hunting for signs of growing AI revenue and demand superseding capacity. “We expect outperformance to be driven by further AI contribution to growth, broader share gains vs. hyperscaler competitors, and increased appetite to pay for high ROI services and new projects as the market gains certainty on rates and the U.S. election as the year progresses,” he wrote.