- Microsoft and Alphabet report quarterly earnings after market close on Oct. 28, 2026, with investors focused on how AI capital spending is affecting free cash flow.
- Microsoft shares have risen 36% since its July 29 earnings showed the fastest cloud growth in four years, while Alphabet has fallen 5% since its July 22 results showed free cash flow turn negative.
- Alphabet’s prior quarter capital expenditure of $44.9 billion exceeded its $39.1 billion in operating cash flow, pushing free cash flow negative for the first time since its 2004 listing.
- Alphabet is projected to post negative free cash flow through 2026 and 2027, while Microsoft’s is expected to dip this fiscal year before rising.
What Happened
Microsoft and Alphabet reported quarterly earnings after market close on Oct. 28, 2026, with Wall Street focused on whether heavy AI capital spending is eating into free cash flow, Bloomberg reported (Oct 28, 2026). The two stocks have diverged sharply since their last reports.
Why It Matters
Microsoft shares climbed 36% since its July 29 earnings showed the fastest cloud growth in four years, while Alphabet fell 5% since its July 22 results showed free cash flow turning negative. The split shows investors now scrutinizing the cash cost of AI buildouts, not just demand growth.
Technical Details
Alphabet’s prior quarter capital expenditure of $44.9 billion exceeded its $39.1 billion in operating cash flow, pushing free cash flow negative for the first time since the company’s 2004 listing. Alphabet is projected to stay free-cash-flow negative through 2026 and 2027, while Microsoft’s free cash flow is expected to decline through its current fiscal year, which ends in June, before rising.
Who’s Affected
The results matter most to shareholders of the two companies and to the broader AI-infrastructure supply chain, including chipmakers and cloud customers watching whether hyperscaler capex holds up. Microsoft and Alphabet are both among the largest buyers of AI compute.
What’s Next
Both companies’ guidance on 2027 capital spending, delivered alongside these results, will shape whether investors continue rewarding AI infrastructure growth or push for tighter cash discipline. Alphabet’s path back to positive free cash flow remains unspecified.
