Market Jitters in 2026? Why Meta and Microsoft Remain Core Long-Term Holdings

Conventional wisdom suggests that when storm clouds gather over the stock market, investors should seek shelter in stable, income-generating value stocks. However, for those with a long-term horizon, market downturns often unveil the most compelling entry points for high-quality growth companies—particularly industry titans with the financial fortitude to not just survive but thrive.

Meta Platforms (NASDAQ: META) and Microsoft (NASDAQ: MSFT), both pillars of the so-called "Magnificent Seven," exemplify this dichotomy. Their recent earnings reports highlight a shared aggressive push into artificial intelligence, yet investor reactions have diverged sharply. Here’s a deeper look at why both companies are positioned to withstand potential market turbulence in 2026 and beyond.

Meta Platforms: A Pragmatic Pivot, Powered by Cash

Meta's latest financials delivered a powerful one-two punch: stellar core earnings coupled with a strategic shift that placated Wall Street. While the company's Reality Labs division continued its streak of significant operating losses, the core Family of Apps business generated a staggering $102.5 billion in operating income for 2025. This cash engine provides Meta with immense latitude to fund its ambitious bets.

The key takeaway for investors was management's guidance that losses in Reality Labs would plateau in 2026, halting a years-long trend of escalating deficits. This, paired with a renewed focus on its Meta Superintelligence Labs initiative, signals a more pragmatic allocation of its vast resources toward nearer-term AI product development. The market's approval was immediate, sending shares soaring post-earnings.

Microsoft: Building the AI Backbone, Patience Required

Microsoft's story is one of monumental investment. Its capital expenditures soared to $37.5 billion last quarter—a near 66% year-over-year increase—as it races to build out the global data center infrastructure required for the AI era. This spending surge, outpacing robust revenue and income growth, initially spooked some investors concerned about diminishing near-term returns.

However, context is critical. Microsoft's fortress balance sheet, with nearly $90 billion in liquid assets, and its status as the S&P 500's leading dividend payer, afford it a rare ability to invest through cycles. The sell-off appears to discount the company's strategic position as the primary cloud and AI infrastructure partner for businesses worldwide, a bet heavily tied to its partnership with OpenAI.

Investor Perspectives: A Heated Debate

Eleanor Vance, Portfolio Manager at Horizon Capital: "This is classic long-term capital allocation. Meta is leveraging its cash cow to fund the next frontier, while Microsoft is building the indispensable plumbing for AI. Short-term noise around capex misses the decade-long opportunity."

Marcus Thorne, Independent Financial Analyst: "The divergence is rational. Meta showed fiscal discipline by capping its money pit. Microsoft's spending is a black box with an OpenAI dependency. Investors are right to question if this is visionary or just wasteful ahead of a potential downturn."

Rebecca Choi, Retail Investor & Tech Blogger: "It's frustrating! The market praises Meta for controlling losses but punishes Microsoft for building the future? This short-sightedness is why retail investors often miss the biggest waves. I'm using the MSFT dip to add to my position."

David Park, University Economics Professor: "These reactions reflect the maturation of the AI investment theme. The initial 'growth at any cost' phase is over. Now, the market is meticulously judging which spending translates to durable competitive advantage and profitability."

In essence, both Meta and Microsoft are deploying their substantial resources to cement their roles in the AI-driven future. For Meta, the path involves direct product integration and a recalibrated moonshot strategy. For Microsoft, it's an all-in bet on becoming the foundational layer for enterprise AI. For long-term investors, periods of market fear regarding these strategies may present the steadiest hands with an opportunity to buy.

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*Stock Advisor returns as of February 2, 2026. Disclosure information applies.