Microsoft, Alphabet Earnings Show AI Demand as Cloud Growth Surges

Microsoft and Alphabet reported quarterly results on October 28, 2026, showing strong demand for cloud computing and AI infrastructure—but also underscoring how expensive the AI buildout has become. Microsoft’s fiscal first-quarter revenue rose 19% to $92.3 billion, while Alphabet’s third-quarter revenue increased 25% to $127.6 billion. The results cover the three months ended September 30, 2026.

Microsoft: Revenue and Azure Growth Beat Expectations

Microsoft’s official earnings release reported revenue of $92.3 billion, up 19% year over year. Operating income rose 21% to $45.9 billion. GAAP net income was $36.6 billion, or $4.92 per diluted share. Microsoft also reported non-GAAP net income of $36.4 billion and non-GAAP earnings per share of $4.89; those adjusted figures exclude the impact of its OpenAI investments.

Microsoft Cloud revenue reached $63.9 billion, up 30% year over year, or 31% in constant currency. Azure revenue increased 48%. Reuters reporting carried by MarketScreener put Azure revenue at about $33.17 billion, above the cited analyst estimate of $32.84 billion. Microsoft’s release confirms the 48% growth rate, while the dollar figure and comparison with consensus are from Reuters’ report.

AI infrastructure spending remains a major investor focus. A post-results analysis by StockTitan, citing Microsoft’s financial summary, put capital expenditure including finance leases at $45.2 billion for the quarter. That is a different measure from cash paid for property and equipment; readers should not treat the two as interchangeable. Microsoft’s official headline release does not list the $45.2 billion figure.

Alphabet: Google Cloud More Than Doubles

Alphabet’s Investor Relations site and its third-quarter earnings release report revenue of $127.6 billion, up 25% year over year. Operating income increased 30% to $40.6 billion, and the operating margin was about 31.8%. Diluted earnings per share were $2.12, compared with $2.87 a year earlier.

Google Cloud was the standout growth driver: revenue rose 103% to $30.71 billion, beating the $29.57 billion analyst estimate cited in Reuters reporting. Google Cloud operating income climbed to $11.1 billion from $3.6 billion a year earlier. Google Services revenue increased 11% to $96.3 billion, with Search & other revenue up 12% to $63.35 billion.

Profit was affected by investment-related losses. Alphabet reported a net loss on equity securities and other items that weighed on non-operating income; a Reuters-syndicated post-results recap put the equity-securities loss at $8.7 billion. Alphabet’s reported net income available to common stockholders was $26.17 billion. Some post-results coverage compared the $2.12 reported diluted EPS with a $3.02 analyst consensus. Because estimates can use different adjusted-EPS definitions, that comparison should not be presented as a direct GAAP-to-GAAP comparison.

AI Spending and Cash Flow Remain Under Scrutiny

Alphabet’s capital expenditure reached $51.4 billion in the quarter, compared with $24.0 billion a year earlier, according to post-results reporting based on the company’s financial disclosures. Year-to-date capital spending reached $132.0 billion. The same reporting put quarterly free cash flow at negative $9.1 billion, illustrating the near-term cash cost of expanding data centers and AI infrastructure.

The two companies’ cloud results show that customers are spending heavily on AI computing. Microsoft Cloud grew 30%, while Google Cloud grew 103%. But those percentages cover different businesses and should not be treated as directly equivalent measures. Investors will continue watching whether cloud demand, AI services and contracted commitments can translate into sustainable profits and cash generation as infrastructure spending rises.

Reported Results vs. Analyst Estimates

• Microsoft reported: $92.3 billion revenue; $4.92 GAAP diluted EPS; Microsoft Cloud revenue of $63.9 billion; Azure growth of 48%.
• Microsoft estimate cited before results: Revenue of about $90.7 billion; Reuters’ post-results report cited Azure revenue consensus of $32.84 billion.
• Alphabet reported: $127.6 billion revenue; $2.12 diluted EPS; Google Cloud revenue of $30.71 billion.
• Alphabet estimates cited in coverage: Google Cloud revenue of $29.57 billion; EPS consensus of $3.02 in one post-results recap. Revenue consensus estimates varied across reports, so this article does not characterize Alphabet’s total revenue as a definitive beat or miss.

Figures are for the quarter ended September 30, 2026. Company-reported results are distinguished above from analyst estimates and third-party reporting. This article is for news and information only, not investment advice.

Sources and further reading: Microsoft official Q1 FY2027 results; Alphabet Investor Relations; Alphabet Q3 results release text; Reuters report on Microsoft Azure; Reuters-syndicated coverage of Alphabet results; StockTitan analysis of Microsoft capex.