Microsoft and Alphabet both reported September-quarter earnings on Wednesday, October 28. Microsoft posted revenue of $92.3 billion, up 19%, and for the first time disclosed Azure's revenue in dollars: $33.2 billion, up 48% year over year and ahead of the roughly $32.3 billion analysts expected, making Azure its largest product line.

Alphabet reported revenue of $127.6 billion, up 25%, with Google Cloud roughly doubling to $30.7 billion — just behind Azure in dollars, but growing about twice as fast. The market split the two: Microsoft rose after hours, while Alphabet fell roughly 7% after Search and YouTube advertising revenue missed estimates and an $8.7 billion loss on equity securities cut into earnings.

The AI buildout's cost showed up in cash flow. Microsoft's capital spending totaled $45.2 billion in the quarter including finance leases, with free cash flow still positive at $18.6 billion, while Alphabet's free cash flow was negative $9.1 billion as its spending surged.