Microsoft: cloud growth, capex below forecast
Microsoft reported fiscal first-quarter revenue of $92.3 billion, up 19 percent from a year earlier. Azure grew 48 percent, and Microsoft Cloud revenue reached $63.9 billion, up 30 percent.
Capital spending nearly doubled to $39.4 billion, below the $50 billion the market had expected, and free cash flow came in at $18.6 billion. Management guided capital expenditure for the fiscal year to about $175 billion after a reclassification of finance and operating leases, keeping AI infrastructure at the centre of the story.
The shares held up because the spending arrived with revenue attached: cloud growth accelerated while the cash cost stayed inside forecasts.
Alphabet: cloud doubles, shares fall
Alphabet reported third-quarter revenue of $127.6 billion, up 25 percent, with Google Cloud up 103 percent to $30.7 billion. Capital spending reached $51.4 billion in the quarter.
Chief executive Sundar Pichai said first-party model APIs now process nearly 32 billion tokens per minute, about four times the level a year ago, and that the Gemini app has reached one billion users. Even so, the stock fell and drew a downgrade, as software and cybersecurity names sold off on disappointing results across the sector.
Why the spending matters
Every dollar of that capex turns into accelerators, high-bandwidth memory, servers and the buildings that hold them, which is why chip suppliers and vacuum equipment makers watch these calls as closely as cloud customers do.
The macro backdrop is supportive. The Federal Reserve held its benchmark rate at 3.75 to 4 percent on October 28 by a 10 to 2 vote, noting that growth has strengthened, and the Atlanta Fed's GDPNow model puts fourth-quarter growth at 3.3 percent.
The open question is payback. Investors are now grading AI spending on revenue it produces this year, not on the size of the announcement.
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