Microsoft and Alphabet Diverge After Earnings on Fed Day

The two companies’ earnings, released after the market closed, drew split reactions on the same day the Federal Reserve held interest rates steady. Microsoft reported fiscal 2027 first-quarter revenue of $92.3 billion, up 19 percent from a year earlier, with adjusted earnings per share of $4.89, above expectations. Azure revenue was disclosed in dollars for the first time, at $33.2 billion, up 48 percent from a year earlier, above the company’s guidance of 44 to 45 percent growth.

Microsoft Cloud revenue rose 30 percent, to $63.9 billion. Capital spending plus finance leases totaled $45.2 billion in the quarter. Shares rose about 4 percent in after-hours trading.

On the earnings call, Microsoft guided December-quarter Azure growth of 49 to 50 percent in constant currency, above market expectations of about 44.6 percent, Barron’s and Investor’s Business Daily reported.

Alphabet reported third-quarter revenue of $127.6 billion, up 25 percent from a year earlier, but below the market expectation of $128.2 billion. Net income was $26.5 billion and earnings per share were $2.12, below expectations of about $3.00, weighed down by an $8.7 billion loss on equity investments.

Google Cloud revenue jumped 103 percent, to $30.7 billion, above expectations, but advertising revenue of $82.0 billion fell short of expectations and dragged down the overall result. Free cash flow was negative $9.07 billion, the second straight negative quarter. Shares fell 7 to 8 percent in after-hours trading.

Both companies confirmed artificial intelligence demand in cloud revenue, but the pace at which that spending returns as cash flow differed from company to company.