Alphabet's shares fell as much as 8 per cent in after-hours trading in New York on Wednesday after the company reported negative free cash flow of $9.1bn for the third quarter, worse than the $5.9bn outflow in the second, as spending on artificial intelligence infrastructure continued to climb.
Revenue rose 25 per cent to $127.6bn, broadly in line with forecasts. Google Cloud grew 48 per cent to $30.7bn, and its operating margin widened to 36.2 per cent. "Cloud significantly accelerated with revenues growing 48 per cent, now on an annual run rate of over $70bn," said Sundar Pichai, the chief executive. But capital spending more than doubled to $51.4bn in the quarter, from $24bn a year earlier. CNBC reported that the company kept its spending plans for 2026 unchanged but expects a significant increase in 2027. Earnings per share fell to $2.12 from $2.87, cut by an $8.7bn paper loss on equity investments.
A different verdict for Microsoft
Microsoft's shares rose about 4 per cent after hours. Revenue grew 18.8 per cent to $92.3bn, ahead of expectations of about $90.8bn, and Azure, its cloud platform, grew 48 per cent. Capital spending of $39.4bn more than doubled from a year earlier but came in below the level investors had expected.
The contrasting reactions sharpen the question hanging over the AI boom, a week after Meta announced a share sale of up to $95bn to fund its build-out: investors are willing to pay for growth, but increasingly want to see the cash it produces. Amazon reports on Thursday.
