Business · Companies · 2 hrs ago
Alphabet and Microsoft report strong AI demand as infrastructure costs rise
Alphabet and Microsoft reported strong demand for AI in their latest quarterly results on Wednesday.
Google Cloud revenue more than doubled to $30.7 billion, while Microsoft’s Azure revenue grew 48%.
The growth is drawing both companies into a costly race to build data centres and other AI infrastructure.
Alphabet spent about $51.4 billion on capital projects in the quarter and expects spending to rise significantly in 2027.
Microsoft reported stronger-than-expected results, while Alphabet shares fell by more than 10% in after-hours trading and Microsoft shares rose 3.5%.
The contrast has sharpened concerns that AI investment may not pay off quickly, even as demand grows.
Alphabet says it will keep adding capacity, while Microsoft is offering lower-priced AI models to encourage use by businesses.
Alphabet and Microsoft reported strong demand for artificial intelligence in their latest quarterly results, while both continue investing heavily in infrastructure.
Alphabet’s Google Cloud revenue more than doubled to $30.7 billion, and Microsoft’s Azure revenue grew 48%.
Alphabet reported third-quarter revenue of $127.6 billion, while Microsoft reported fiscal first-quarter revenue of $92.3 billion.
Alphabet said it expects capital spending to rise significantly in 2027 after projecting $195 billion to $205 billion for 2026.
The reports highlighted contrasting financial pressures: n-tv reported Alphabet’s shares fell sharply after hours, while Microsoft’s rose.
- Who
- Alphabet and Microsoft, the US technology companies.
- What
- Both reported strong demand for AI and cloud services alongside heavy infrastructure spending.
- When
- Wednesday, October 28, 2026.
- Where
- Not stated
- Why
- Demand for AI services is growing, prompting both companies to expand infrastructure; the investment costs are putting pressure on finances.
Alphabet
Microsoft
Financial results
Alphabet
Alphabet’s cloud revenue more than doubled, but n-tv reported weak cash flow, an operating loss and investor concern about its spending.
Microsoft
Microsoft reported 48% Azure growth and $18.6 billion in free cash flow, which n-tv said was twice expectations.
Investor reaction
Alphabet
Alphabet shares fell by more than 10% at one point in after-hours trading, according to n-tv.
Microsoft
Microsoft shares rose 3.5%, according to n-tv.
Microsoft’s Azure business grew 43%, according to n-tv.
Alphabet and Microsoft reported their quarterly results.
Alphabet shares fell by more than 10% at one point, while Microsoft shares rose 3.5%, according to n-tv.
- Alphabet third-quarter revenue
- $127.6 billion
- Microsoft fiscal first-quarter revenue
- $92.3 billion
- Google Cloud revenue
- $30.7 billion, up 103% year over year
- Azure revenue growth
- 48%
- Alphabet projected 2026 capital spending
- $195 billion to $205 billion
- Microsoft free cash flow
- $18.6 billion
2 sources
What people are saying
Our AI infrastructure and solutions are the major drivers for Cloud growth, and our customers see us as the leading provider here, so there’s huge demand
We are working hard to bring more capacity online to meet this long-term demand.
so flawless as results can be for a company of this size
Microsoft’s growth will depend less on the number of users in the future than on how much work AI agents take on in companies.