Cash is king as investors draw new battle lines in AI spending boom
Microsoft topped sales and profit estimates as Azure grew 48%, while Alphabet’s $51.4 billion capex pushed free cash flow to negative $9.1 billion.
- On Wednesday, Microsoft and Alphabet reported quarterly earnings, with Microsoft shares jumping more than 3 per cent while Alphabet plunged nearly 10 per cent as investors assessed their competing approaches to artificial intelligence spending.
- Alphabet's massive artificial intelligence infrastructure investments have created a cash crisis; the company spent $51.4 billion on capital expenditures this year, resulting in negative $9.1 billion free cash flow compared to Microsoft's healthier position.
- Google Cloud revenue surged 103 per cent to $30.7 billion, while Microsoft Cloud revenue rose 30 per cent to $63.9 billion. Microsoft CEO Satya Nadella said "shiny object stuff is waning" as businesses commit to long-term contracts.
- Alphabet's search revenue grew 12 per cent but missed expectations, while Chief Financial Officer Anat Ashkenazi warned that Google Cloud faces near-term margin pressure as the company expands computing capacity to meet demand.
- Alphabet projects capital expenditures will "increase significantly" in 2027 after spending $195 billion to $205 billion this year. Check Capital's Jeremy Saltzberg said the sector is a "sport of kings," requiring $150 billion annually to stay competitive.
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Fox Business
The New York LedgerAlphabet, Microsoft earnings reveal surging AI demand as spending soars
Alphabet and Microsoft reported strong earnings fueled by growing AI demand, even as the tech giants continue investing billions in data centers and cloud infrastructure.
Microsoft and Alphabet Just Reported Earnings, Putting the AI Boom to the Test
Key PointsAzure revenue grew 48%, while Google Cloud revenue more than doubled.Alphabet burned $9.1 billion in free cash flow, while Microsoft generated $18.6 billion.Microsoft has more room to fund its spending, but the long-term payoff remains uncertain for both companies.Motley Fool Issues Rare "Total Conviction" Buy Alert › Two tech behemoths -- Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT) -- reported earnings today. Bot…
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cedarnews.netBillions are flowing into data centers, but only one company earns a great deal of money. While Microsoft Finance Director announces a record cash flow, the Alphabet share collapses in double digits. Concern is growing that the AI bubble could burst.
While Azure’s growth boosted Microsoft’s revenue, Alphabet faced a drop in its free cash flow. Microsoft’s release exceeds expectations with Azure while Alphabet resents AI spending first appeared in the CEO.
Alphabet loses more than 7% in post-closure operations despite the growth of Google Cloud. Microsoft surprises with a 48% advance in Azure, while the Dow Jones finishes at 52,475 points.
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