To The Moon

Google and Microsoft are spending billions to compete in AI, but Wall Street delivered two very different verdicts.

Alphabet plunged more than 10% after hours, despite Google Cloud revenue doubling. Microsoft, meanwhile, rallied as Azure growth accelerated and cash flow beat expectations. Vertiv surged nearly 17% on booming data-center demand, while ServiceNow tumbled about 18% despite growing AI bookings. $Alphabet(GOOG)$ $Alphabet(GOOGL)$ $Microsoft(MSFT)$ $Vertiv Holdings LLC(VRT)$ $ServiceNow(NOW)$

$Alphabet(GOOGL)$ Down more than 10% after hours

Alphabet owns Google Search, YouTube, Gemini and Google Cloud.

Third-quarter revenue rose 25% to $127.58 billion, slightly below the $128.2 billion consensus. Reported EPS came in at $2.12, weighed down by an $8.7 billion investment-related loss.Google Cloud was the standout. Revenue surged 103% to $30.71 billion, while operating profit reached roughly $11.1 billion. Gemini also hit one billion users.

But the spending bill was enormous. Capital expenditures reached $51.4 billion, pushing quarterly free cash flow to negative $9.07 billion. Alphabet expects AI investment to increase significantly again in 2027.

The selloff reflects growing concerns about how quickly the company can turn its massive AI investments into sustainable cash flow, particularly as its core search business faces changing user behavior.

$Microsoft(MSFT)$ Shares rallied after earnings

Microsoft operates Azure, Microsoft 365, Windows and a growing portfolio of enterprise AI services.

Fiscal first-quarter revenue climbed 19% to $92.28 billion, beating estimates near $90.6 billion. Adjusted EPS of $4.89 topped the $4.72 consensus.

Azure revenue jumped 48% to $33.17 billion, while Microsoft's commercial remaining performance obligations reached $677 billion, up 73%. For the December quarter, management expects Azure growth of 49%–50% in constant currency.

Microsoft also generated $18.6 billion in free cash flow, despite spending $45.2 billion on capital expenditures.Shares initially gained more than 5% after the release, reflecting investor confidence in Azure's momentum, enterprise demand and the company's ability to fund its AI expansion.

$Vertiv Holdings LLC(VRT)$ Up nearly 17%

Vertiv supplies power and cooling systems for data centers.

Third-quarter revenue soared 61% to $4.31 billion, beating estimates of $3.75 billion. Adjusted EPS reached $2.21, well ahead of the $1.82 consensus. Organic orders more than doubled, and management raised its full-year revenue guidance to $14.45 billion–$14.85 billion.

Shares jumped approximately 16.5%, as demand for AI data-center infrastructure continued to translate into strong orders and higher earnings.

$ServiceNow(NOW)$ Down about 18% after hours

ServiceNow provides enterprise software that automates IT, customer service and business workflows.

Third-quarter revenue increased 20.5% to $4.11 billion, slightly ahead of expectations. Adjusted EPS of $1.00, however, missed the $1.02 consensus.

The company raised its 2026 AI annual contract value target to $1.7 billion, but investors were concerned about slower expected growth in current remaining performance obligations and how quickly AI contracts would translate into subscription revenue.

Shares fell roughly 18% after hours, underscoring the high expectations already priced into enterprise AI stocks.

💬 Discussion

Google Cloud revenue doubled, yet Alphabet shares fell more than 10% after earnings. Would you buy the dip in GOOGL, or wait for a better entry?

• A. Buy the dip — Google Cloud and Gemini still have plenty of room to grow.

• B. Wait and see — AI spending is getting expensive.

• C. Prefer Microsoft — Azure's growth and cash flow look more convincing.

What's your move?