Alphabet’s Q2 capex doubled to $44.9 billion, pushing free cash flow negative, while Microsoft’s $678 billion backlog offsets AI spending concerns.
Alphabet reported $119.796 billion in Q2 revenue but posted its first negative free cash flow quarter at -$5.9 billion after capex surged to $44.9 billion. The company suspended buybacks and raised 2026 capex guidance to $195 billion-$205 billion, signaling sustained AI infrastructure investment.
Microsoft’s Q4 revenue reached $90.01 billion, with Azure growth at 43% and commercial RPO swelling to $678 billion. Free cash flow declined 23.19% to $19.64 billion, though Copilot’s 30 million paid seats and a $100 billion Azure milestone provided revenue visibility.
Markets reacted sharply: MSFT rose 15% post-earnings, while GOOGL slipped, reflecting investor preference for Microsoft’s backlog-driven certainty over Alphabet’s capex-heavy AI strategy.