There is a moment in every spending boom when the money stops coming out of the business and starts coming out of the bond market. Meta made that moment official on Wednesday, in front of everybody.
Record Sales, Softer Everything Else
Meta’s sales came in at $60.8 billion, up 28% from a year ago. That is a record. Almost nothing else in the release was.
Net income was $15.8 billion for the April-to-June period, below what analysts expected. The guidance missed too. Wall Street had penciled in roughly $63 billion of sales for the September quarter, and the company said the number is likely to land between $61 billion and $64 billion.
On spending, Meta raised the low end of its capital-expenditure forecast above the previously announced $125 billion. The top end stayed at $145 billion.
Legal proceedings cost the company $2.4 billion in the quarter. In August it goes to trial in federal court in Oakland, where four attorneys general have asked for damages of up to $1.4 trillion. Meta’s whole market value is about $1.5 trillion. Another trial in that set of cases is slated for February.
The Bond Market Set a Price
Big technology companies have been borrowing hard this year, and lenders are tiring. New bond supply from AI companies hit $270 billion in early July, almost double the total for all of 2025, according to Bank of America Global Research.
Monday brought the proof. A $12.55 billion note sale tied to Meta’s El Paso, Texas, project priced about 2.875 percentage points above the 10-year Treasury — a yield of 7.5%. Bonds on a similar Meta project in Louisiana traded about half a point cheaper that same day.
Same sponsor, same kind of building, one year apart, half a point worse. That is the whole message.
Meta has been creative about keeping this debt off its own balance sheet. The Louisiana project was structured with Blue Owl Capital, which invested about $3 billion for an 80% stake, and the holding company issued $27 billion of bonds. Meta guarantees the lease payments, which is what earned the deals investment-grade ratings.
“The market is expecting the build to continue,” said Neha Khoda of Bank of America. “Just at a higher price point.”
Two Companies, Two Documents
On the same afternoon, Microsoft reported revenue up 18% to $90 billion for the quarter ended in June. Net income rose 31% to $35.8 billion, beating expectations. Azure passed $100 billion of revenue for the first time.
One company reported subscribers. The other reported a coupon. That is the distinction we keep drawing.
The rest of the group is feeling it too. S&P cut Oracle’s credit rating this month to one notch above junk. Alphabet slipped after lifting capital spending toward $200 billion and going free-cash-flow negative for the first time since its IPO. Amazon and Oracle have turned negative as well.
Analysts still expect the five biggest cloud companies to lift combined operating margins to about 31% in 2029 from 27% last year. Half of that improvement depends on overhead falling to about 8% of revenue from 10%. That is roughly $77 billion of corporate expense that has to simply not happen.
It has to not happen at the exact moment depreciation on all these new buildings starts landing. If the efficiency does not arrive, more borrowing is the plug. That is why we read the coupon before the headline.