The stock market isn’t buying the hype. MSFT is down 12% year to date, and more than 20% in the past six months.

Meta Platforms: Offsetting “other investments”

According to Bloomberg, Meta told its employees that the 10% job reductions were being done as “part of our continued effort to run the company more efficiently” and “offset the other investments we’re making.” That’s a sign that Meta layoffs are directly related to the company’s big spending on AI capex.

Meta expects to spend $115 billion to $135 billion in 2026 on capital expenditures, including its Meta Superintelligence Labs AI efforts. But will Meta’s AI investments lead to more profit for the company? Or is this another expensive, speculative effort like the metaverse? Meta CEO Mark Zuckerberg used to talk about the metaverse and virtual reality as if it were an inevitable future of the internet that would change everything — he even changed the name of the company from Facebook.

But heavy spending on the heavily hyped metaverse cost the company $80 billion, and millions of new metaverse users (and advertisers) never materialized. As of March 2026, Meta’s metaverse projects have been largely abandoned. In the past few years, the company has gone all-in on AI.

I’m more optimistic about Meta’s ability to use AI for profitable purposes. The company seems to be deploying AI in ways that are driving results for its ad business — by improving ad targeting and boosting engagement among social network users. Meta’s AI investments might pay off. But shares are down 10% in the past six months and have underperformed the S&P 500 index for the past year.

It’s possible that Meta and Microsoft investors will be big winners from a new revolution in AI-driven productivity. But the companies’ recent job cuts don’t inspire confidence. Instead of boosting profits and unleashing innovation, Microsoft’s and Meta’s AI spending could be weighing too heavily on the companies’ cash flow. Investors will want to see how AI is driving better bottom-line results for these AI stocks, not just hype — and soon.

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Ben Gran has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms and Microsoft. The Motley Fool has a disclosure policy.

Shocking Layoffs (Up to 10%) Could Be Bearish for These 2 Tech Stocks was originally published by The Motley Fool