[UPDATE] Microsoft Rises, Alphabet Slips on AI Spending

The two earnings reports that the market was waiting on landed on the evening of October 28, and the reaction pulled the two companies in opposite directions.

Microsoft beat expectations. Revenue came in at $92.28 billion, up 19% from a year earlier, and Azure grew 48% to $33.2 billion, ahead of the roughly 45% analysts had penciled in, according to SiliconANGLE. The stock rose about 4% after hours. Finance chief Amy Hood guided Azure growth to 49% to 50% for the December quarter and signalled capital spending above $50 billion in the period, with roughly $170 billion earmarked for the full fiscal year.

One figure stood out. Hood told investors that about 75% of that capital now goes toward short-lived assets such as Nvidia GPUs and Intel CPUs, chips that depreciate quickly. Free cash flow fell 27% to $18.63 billion as the bills came due.

Alphabet spends, and pays for it

Alphabet's results were strong on paper. Revenue climbed 25% to about $127.6 billion, and Google Cloud reached $30.7 billion. Yet the shares fell between 7% and 10% after hours. The reason was spending. Capex more than doubled to $51.4 billion for the quarter, free cash flow turned negative, and the company said 2027 investment would rise sharply from an already elevated 2026 budget of $195 billion to $205 billion, as The Motley Fool reported.

The contrast is the story. Both companies are pouring record sums into AI infrastructure. Microsoft convinced investors it can fund that build-out from its own cash and keep margins intact. Alphabet left them worried about how long the returns will take. The split lands in the same week that Wall Street turned nervous about the debt piling up behind the data-center boom.