INVESTORS FOCUS ON CASH FLOW IN AI SPENDING AS MICROSOFT RISES AND ALPHABET FALLS AFTER HOURS

Investors are focusing on cash flow and returns from AI investment as major technology companies expand their computing infrastructure. Microsoft shares rose more than 3% after reporting $18.6 billion in free cash flow and 48% Azure revenue growth, while Alphabet fell nearly 10% after weaker-than-expected Google Search growth and plans for higher capital expenditure. Oracle also gained nearly 11% after outlining plans to limit external financing and improve cash flow.

29 Oct 20261 min read

Daily Market Update October 29, 2026

INVESTORS FOCUS ON CASH FLOW IN AI SPENDING AS MICROSOFT RISES AND ALPHABET FALLS AFTER HOURS

Reuters reported that investors are demanding more evidence that AI-related growth can finance the next round of spending, drawing a sharper distinction between companies making money from AI and those struggling to contain its costs. According to Reuters, Microsoft shares rose more than 3% in after-hours trading, while Alphabet fell nearly 10%.

Microsoft generated $18.6 billion in free cash flow in its fiscal first quarter, nearly $10 billion above Wall Street expectations, despite spending $45.2 billion on computing infrastructure. Revenue at its Azure cloud business increased 48%, exceeding expectations, while the company forecast faster-than-expected cloud growth for the current quarter.

Alphabet’s Google Search revenue grew 12% in the September quarter, below expectations for 14.7% growth. Chief Financial Officer Anat Ashkenazi said capital expenditure would increase significantly in 2027.

Google Cloud revenue more than doubled to $30.71 billion, while cash burn reached $9.07 billion, after the company posted its first quarter of negative cash flow in the June period. Alphabet’s capital expenditure could reach $205 billion this year, according to the report.

Oracle shares ended regular trading nearly 11% higher on Wednesday after the company outlined plans to limit external financing and said it expected to generate positive cash flow in the second half of fiscal 2028.

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