Microsoft lifts, Alphabet slumps after earnings

The news: Shares in Microsoft have jumped after it beat estimates for its fiscal first-quarter results, but those in Alphabet slumped after the Google parent’s cloud division missed estimates for third-quarter revenue.

The numbers: Microsoft’s revenue rose a higher-than-expected 13% to USD56.5 billion ($89 billion) in the September quarter, driven particularly by strength in its cloud-computing and PC businesses. Microsoft shares rose 4.3% in after-hours trading. Meanwhile, Alphabet shares slumped more than 6% in after hours trading after Google Cloud’s third-quarter revenue rose 22.5% to USD8.41 billion, the slowest growth since the start of 2021, missing estimates.

The context: The drop in Google’s share price, despite beating Wall Street estimates for profit and sales, shows how much investors want the company to deliver gains in AI, and that its cloud business remains competitive against a more powerful Azure from Microsoft and Amazon.com’s AWS. Fears of a slowing global economy have prompted companies to curb spending on cloud-related services, including expensive AI tools, which has slowed revenue growth at Google's cloud unit. By contrast, Microsoft's Intelligent Cloud unit, which houses the Azure cloud-computing platform, has performed strongly as it capitalises on booming interest in artificial intelligence.