Microsoft's cloud beat forecasts, and Alphabet's search business fell short

Microsoft Google

Microsoft and Alphabet reported within minutes of each other after Wednesday's close in New York. Microsoft shares rose about 4% in after-hours trading, while Alphabet's fell about 7%.

Microsoft's revenue rose 19% to US$92.3 billion, ahead of the US$90.7 billion expected. Azure, its cloud business, grew 48% excluding currency moves. The company's own guidance had been 44% to 45%.

Alphabet's cloud did even better, which makes the fall stranger. Google Cloud revenue more than doubled to US$30.7 billion, up 103% and about US$1.6 billion ahead of forecasts.

Chart: Alphabet's building bill hit US$91.4bn in 2025. Cash Alphabet and Meta paid for equipment and buildings each calendar year, 2013 to 2025, in US$bn. Alphabet spent US$51.4bn in the September quarter alone. — This story’s chart of the day: the numbers, the dark version and the animated version are on its own page. The chart’s page →

Search was the problem. Search revenue came in at US$63.4 billion against US$64.9 billion expected, and YouTube advertising missed as well. Operating profit of US$40.6 billion was about US$2.6 billion short of forecasts.

That matters because search pays the bills. Alphabet spent US$51.4 billion on equipment and buildings in the quarter, much of it on data centres for the cloud business that just doubled.

Next up

on Monday we said we'd want cloud revenue at these companies growing faster than their spending, and both cleared that bar. Alphabet's test is now search, where AI answers have to keep earning what the old list of links did.

This story ran in Hold Everything Thursday 29 October’s edition, with the market snapshot, the other two stories, the numbers and the week ahead. Read the whole edition →

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