Alphabet, Microsoft and Amazon lift AI spending again, and investors balk

Alphabet and Microsoft reported quarterly results on 28 October and Amazon on 29 October. All three showed cloud growth and higher AI-related capital spending; share prices fell in the following days.

Alphabet’s release reported revenue up 25% to $127.6bn and Google Cloud revenue up 103% to $30.7bn, with sales of TPU systems cited as a contributor. Purchases of property and equipment were $51.4bn in the quarter and free cash flow was negative $9.1bn; the company also reported $28.7bn of net proceeds from senior notes. Chief executive Sundar Pichai said the Gemini app had reached one billion users. Search and other revenue rose 12%; The Register reported that chief business officer Philipp Schindler attributed the slowdown to “lower monetization we were seeing in AI Mode”.

Microsoft’s release gave revenue of $92.3bn, up 19%, and Azure growth of 48%. On the earnings call, chief financial officer Amy Hood put capital expenditure at $45.2bn including finance leases, against $39.4bn cash paid for property and equipment, and said some third-party capacity deliveries had been delayed. She guided to over $50bn in the next quarter and about $170bn for the calendar year, below the roughly $190bn recorded in April. The company’s 10-Q disclosed, under related-party accounting rules, $10.0bn of revenue from commercial arrangements with OpenAI, including revenue-sharing payments, and $7.2bn of receivables from it.

Amazon’s release reported AWS sales up 39% to $46.0bn. Purchases of property and equipment were $77.3bn in the quarter, and trailing-twelve-month free cash flow was an outflow of $42.4bn. Chief executive Andy Jassy projected AWS growth above 40% in both 2027 and 2028.

TechCrunch reported that the Nasdaq fell 2.9% on Friday 30 October and that Nvidia lost 4%. It said Alphabet had fallen 12% on Thursday, erasing about $500bn of market value; The Register’s earlier report had put the fall at almost 10%. It said Alphabet, Amazon, Microsoft and Meta had outlined more than $740bn of capital spending for the year, without saying who totalled it. It also noted that Microsoft was the only one of the four with positive free cash flow in the period, and cited S&P Global Market Intelligence for $326bn of debt raised in 2026 by Microsoft, Alphabet, Amazon, Meta and Oracle.

The same fortnight brought Meta’s equity sale and Oracle’s cap on new borrowing, both aimed at paying for the same build-out.