Alphabet Shares Surge on Cloud Gains as AI Spending Weighs on Microsoft and Meta
Alphabet shares surged following strong third-quarter earnings that exceeded analyst expectations, particularly driven by robust growth in its cloud-computing unit, while Microsoft and Meta stocks declined amid investor concerns over soaring artificial intelligence spending. As reported by Bloomberg's Stock Movers podcast, Alphabet's performance highlighted its gains in the cloud market, positioning it as a key challenger to leaders like Microsoft Azure and Amazon Web Services, with shares climbing as much as 7.5% in extended trading.
Microsoft's shares fell around 3% to 4% in after-hours trading despite positive notes on Azure's expansion, as the company's capital expenditures hit a record $37.5 billion—surpassing estimates—and fueled worries that AI infrastructure costs could delay returns. Analysts noted that while the earnings showed growth, elevated investor expectations were not fully met, contributing to the sell-off in this Magnificent 7 heavyweight.
Meta Platforms also saw its stock drop, initially as much as 4.7% before some recovery, after reporting third-quarter sales of $51.2 billion that beat forecasts but revealing sharply higher expenses for data centers and AI development. The company flagged significant cost increases into 2026, including a one-time $15.9 billion non-cash tax charge, raising questions about when its heavy AI investments—alongside peers like Microsoft and Alphabet—will translate into sustained profits.
These moves underscore the high stakes in the AI race, where the trio collectively ramped up capital spending by about 89% year-over-year to nearly $78 billion last quarter, betting big on cloud and AI infrastructure to capture demand from startups and enterprises. According to discussions on Bloomberg's Closing Bell and related podcasts, Alphabet benefited most from AI-driven cloud momentum, while Microsoft and Meta faced scrutiny over spending levels that outpaced Wall Street projections.
Investors in these tech giants, which dominate market indexes, are closely watching for signs that AI hype will deliver tangible returns amid a broader market shift. The divergent reactions—up for Alphabet, down for the others—signal potential volatility ahead, especially as fourth-quarter outlooks and ongoing capex trends come into focus. Traders and analysts, as covered in multiple Stock Movers episodes, emphasized keeping an eye on these leaders, whose performance could sway sentiment across the sector.