Okay, this one actually made me sit up last night. Alphabet reported earnings and on paper it looks great — Google Cloud more than doubled to $30.7 billion, total revenue up 25% to $127.6 billion. And the stock still dropped about 10% after hours.
The reason is pretty simple, and kind of brutal: Alphabet spent $51.4 billion in three months on data centers and chips, and its free cash flow went negative $9.1 billion. That’s the second quarter in a row in the red. Search growth slowed to 12% too, which didn’t help.
Meanwhile Microsoft reported the same night and went the other way — Azure up 48% to $33.2 billion, and investors actually liked its numbers. So suddenly the market isn’t just cheering anyone who spends big on AI. It’s asking, okay, when does this start paying for itself?
I keep going back and forth on this. You can’t build the AI future without spending huge amounts of money right now, but at some point ‘we’ll make it back later’ stops being a strategy. Where do you land — is this just a blip while Google builds out, or is this the moment the AI spending spree starts getting real scrutiny?
