Overview
- Alphabet, which reported results on Wednesday, posted $127.6 billion in third‑quarter revenue but missed Wall Street forecasts and saw its stock fall about 9–12% after disclosing roughly $51 billion in quarterly capital spending and a negative free cash flow near $9.1 billion.
- Google Search ad revenue grew only about 12%, lagging expectations, because the new AI search mode currently yields fewer ad slots per query and monetizes those queries less effectively than classic search.
- Google Cloud doubled revenue to roughly $30.7 billion and delivered strong operating gains, but that growth depends heavily on large customer deals and hardware sales and could face margin pressure from renting third‑party capacity.
- Microsoft delivered the contrast investors wanted by reporting robust Azure growth (about 48%), $92.3 billion in revenue and roughly $18.6 billion in free cash flow, which helped lift its stock and highlighted the market’s premium on cash conversion.
- Alphabet has taken on large long‑term commitments and raised debt and equity to finance an estimated $195–205 billion (and higher next year) infrastructure program, a strategy that has triggered heavy re‑pricing of tech valuations and could force tougher choices on monetizing AI search and protecting margins.