{
  "id": 16980102,
  "title": "Microsoft and Alphabet Just Reported Earnings, Putting the AI Boom to the Test",
  "url": "https://urgent.news/2026/10/28/microsoft-and-alphabet-just-reported-earnings-putting-the-ai-boom-to",
  "topic": "ai",
  "section": "AI",
  "published": "2026-10-28T23:59:01.000Z",
  "source": {
    "name": "Motley Fool",
    "slug": "motley-fool",
    "url": "https://www.fool.com/investing/2026/10/28/microsoft-and-alphabet-just-reported-earnings-putting-the-ai-boom-to-the-test/?source=iedfolrf0000001"
  },
  "original_language": "en",
  "account": "Two major tech companies, Alphabet and Microsoft, released their earnings reports today, each showing robust cloud growth. However, investor reactions to these reports have been divergent. Microsoft's shares surged after hours, while Alphabet's stock declined. The primary reason behind this disparity appears to be each company's strategy for financing the significant investments they plan to make. Microsoft surpassed market expectations, with sales increasing by 19% to $92.3 billion. Its GAAP earnings per share (EPS) were $4.92, and adjusted EPS stood at $4.89, both outperforming the anticipated $4.72. Azure, Microsoft's cloud platform, expanded by 48%, generating $33.17 billion in revenue. On the other hand, Alphabet experienced even more impressive cloud growth, with a 103% increase, resulting in $11.1 billion in operating income on $30.7 billion in sales. Despite this, overall sales rose by 25%, reaching $127.6 billion, slightly below expectations, while GAAP EPS dropped from $2.87 to $2.12. Additionally, search and YouTube ads underperformed. Alphabet's earnings disappointment can partly be attributed to an $8.7 billion net loss on equity securities, but even after excluding this, the results still fell short of Wall Street's projections. The market's reaction seems to be more about Alphabet's financial standing than the impressive growth. The company spent $51.4 billion on capital expenditures (capex) this year, up from $24.0 billion the previous year, while its operating cash flow was $42.3 billion. This left free cash flow (FCF) at a negative $9.1 billion, a more negative figure than the $5.9 billion reported in the previous quarter. Throughout the quarter, Alphabet raised $28.7 billion through senior unsecured notes and $12.4 billion from selling stock. The company's long-term debt has risen from $46.5 billion at the end of 2025 to $125.1 billion. Alphabet projected its capex for 2026 to fall between $195 billion and $205 billion, but it anticipates a substantial increase in capex for 2027. Microsoft, in contrast, remains free-cash-flow positive, although this metric is also declining. The company reported $18.63 billion in FCF, down 27% year-over-year, following $39.37 billion in cash capital spending. Furthermore, its broader capex, including finance leases, amounted to $45.2 billion. On Microsoft's July earnings call, CFO Amy Hood stated that the company anticipates staying free-cash-flow positive for the current fiscal year, although capex is expected to grow. She also mentioned that demand for their cloud services is exceeding supply. While Microsoft still has a healthier cash reserve that can cover spending while waiting for investments to yield returns, Alphabet appears to be increasingly relying on lenders and shareholders to cover its bills. Both companies' growth seems hard to dispute, but a lingering question remains: will this strategy ultimately prove profitable for both? Costs are rising, and I harbor concerns that the mathematics may not add up in the long term.",
  "summary": "Cloud growth is booming at Microsoft and Alphabet. But paying for that growth is becoming a very different story.",
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 4,
    "also_reported_by": [
      {
        "outlet": "CNBC World",
        "title": "Alphabet set to report Q3 earnings after the bell as shaky AI trade looks for signs of strength",
        "url": "https://urgent.news/2026/10/28/alphabet-set-to-report-q3-earnings-after-the-bell-as-shaky-ai-trade",
        "published": "2026-10-28T16:33:22.000Z"
      },
      {
        "outlet": "Seeking Alpha News",
        "title": "Alphabet talks cloud strength, capex, and AI mode upside on its earnings call",
        "url": "https://urgent.news/2026/10/28/alphabet-talks-cloud-strength-capex-and-ai-mode-upside-on-its",
        "published": "2026-10-28T21:22:31.000Z"
      },
      {
        "outlet": "Nasdaq Markets",
        "title": "Microsoft and Alphabet Just Reported Earnings, Putting the AI Boom to the Test",
        "url": "https://urgent.news/2026/10/29/microsoft-and-alphabet-just-reported-earnings-putting-the-ai-boom-to",
        "published": "2026-10-29T00:19:01.000Z"
      }
    ]
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}