LONDON/MILAN (Reuters) - Microsoft ( MSFT ) shares fell in Europe on Thursday after it issued a downbeat forecast for its cloud business, while Facebook parent Meta shares rose after beating expectations, as investors scrutinised the companies' spending on artificial intelligence.

Microsoft ( MSFT ) shares traded down 4.5% on the Frankfurt market, having fallen a similar amount in after-hours trading on Wednesday and finishing the regular session down 1.1%.

Meta shares opened up 2.5% in Germany, having risen 2.1% after the closing bell and ending the regular session up 0.3%.

Days after Chinese upstart DeepSeek revealed a breakthrough in cheap AI computing that shook the U.S. technology industry, the chief executives of Microsoft ( MSFT ) and Meta defended massive spending that they said was key to staying competitive in the new field.

(Reporting by Amanda Cooper and Danilo Masoni; Editing by Dhara Ranasinghe.)