Microsoft beats expectations while Alphabet posts record post-earnings drop

Microsoft beat quarterly expectations with revenue up 19% and Azure cloud business growth of 48%. Capital spending came in below expectations at $45.2 billion, and shares rose nearly 4%. The company is offering voluntary buyouts to about 60,000 employees to reduce costs while continuing AI investment. In contrast, Alphabet shares fell 13% at the time of taping, marking its biggest ever post-earnings drop. The company missed Wall Street quarterly earnings expectations for the first time in nearly four years, despite revenue growing 25%. Alphabet reported negative free cash flow of $9 billion, its second straight negative quarter, with capital expenditure hitting $51.4 billion in a single quarter. Long-term debt jumped to nearly $100 billion, up 6x year-over-year from $21 billion. Cloud revenue more than doubled to $30.7 billion, but search advertising revenue missed expectations, growing only 12%. Google's Gemini app has reached 1 billion users, though the company faced questions about its AI search tool failing to correctly identify the winner of the 2020 election. Microsoft demonstrated discipline by threading the needle between reasonable capex and top-line growth, whereas Alphabet's massive debt increase and negative cash flow signaled a lack of ROI discipline that spooked the market.