Alphabet plunges 10% while Microsoft rises: the day artificial intelligence split Wall Street in two

On Wednesday, October 28, 2026, two tech giants reported their results at the same time: Alphabet, the owner of Google, and Microsoft. The stock market reacted in completely different ways.

Alphabet: selling more, but spending a lot

Alphabet brought in $127.58 billion in the quarter, 25% more than a year earlier. Even so, it came in slightly below what analysts expected.

The big blow came from profit: $2.12 per share, versus the $3.02 expected. Part of the gap was due to an $8.2 billion loss on its investment in SpaceX, according to Investing.com.

What scared investors most was spending. Alphabet invested $51.36 billion in just three months, mostly in data centers for artificial intelligence. That is why its free cash flow was negative: more money went out than came in, about $9.07 billion.

It also warned that it will spend even more in 2027. Its shares fell nearly 10% in after-hours trading.

Google Cloud, Alphabet's cloud business, was the only bright spot: its revenue grew 103%.

Microsoft: better than expected

Microsoft brought in $92.28 billion, above the $90.61 billion forecast. It earned $4.89 per share, versus the $4.72 expected.

Azure, its cloud, grew 48%. Its shares rose about 3%.

Why it matters

Big tech companies are spending never-before-seen sums on artificial intelligence. Investors no longer just look at whether sales are growing: they want to see that spending turn into money.

According to IndexBox, citing Euronews, Alphabet's stumble revived doubts about whether artificial intelligence will make enough profit to pay for so much investment.