Meta and Microsoft have reported better-than-expected earnings for the last quarter carried by their AI businesses, but muted outlooks saw their shares drop after hours.

Shares in Meta Platforms Inc. and Microsoft Corp both fell in after-hours trading despite strong Q3 earnings on Oct. 30, as executives reduced their earnings outlook and forecasted more AI spending.

Meta reported on Oct. 30 that its Q3 revenues were up 19% year-on-year to $40.59 billion and passed Wall Street estimates of $40.21 billion. Its earnings per share (EPS) came in at $6.03, beating estimates of $5.19.

Microsoft’s results said revenues were up 16% from last year to $65.59 billion, beating estimates of $64.41 billion alongside its EPS coming in at $3.30 — above the $3.08 expectation.

The pair’s earnings come as they and America’s other Big Tech players, Google, Apple and Amazon, all sunk big money into AI, launching new models or making new hardware to back the hot new tech.

This year, Meta rolled out Meta AI across its popular WhatsApp, Facebook, and Instagram apps, leading founder and CEO Mark Zuckerberg to state that the firm “had a good quarter driven by AI progress.”

Meanwhile, Microsoft’s earnings were boosted by a 33% year-on-year growth in its AI-powered Azure business, beating expectations it would grow around 29%.

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“Our AI business is on track to surpass an annual revenue run-rate of $10 billion next quarter, which will make it the fastest-growing business in our history to reach this milestone,” Microsoft CEO Satya Nadella said on an earnings call.

However, the shares of both companies have fallen in after-hours trading on Oct. 30 after seeing an initial jump.

META fell 3.18% from its $591.80 close to $573, while MFST dropped 3.71% from its $432.53 close to $416.50, per Google Finance data.

Traders were seemingly spooked by the outlook of both companies, who both signaled more big spending was to come on AI with little near-term results.

On the earnings call, Zuckerberg noted its AI investments would “continue to require serious infrastructure“ and expected Meta would continue “significant” investment, adding it hadn’t “decided on a final budget yet.”

Financial chief Susan Li said it was focused on making Meta AI “as engaging and valuable a consumer experience as possible” and that “monetization opportunities will exist over time.”

Meta expected its full-year capital expenditures to land between $38 billion to $40 billion and expected “significant capital expenditures growth in 2025.”

Meta shares also dropped as it missed expectations for daily active users — a core metric on the health of its business — which notched a 5% year-over-year jump to 3.29 billion on average, lower than the anticipated 3.31 billion.

Microsoft, meanwhile, said in its outlook for the current quarter that it expected its core AI offering, Azure, to grow between 31% and 32%, slightly down from the 33% posted last quarter.

It added it expects revenue for this current quarter to land between $68.1 billion and $69.1 billion, below analyst expected revenues of $69.89 billion.