Alphabet and Microsoft are on both sides of the biggest bills in the AI ​​boom: chart of the day

Wall Street bought Microsoft and sold Alphabet after quarterly results were released Wednesday evening. Both lease computing power to and have stakes in AI labs, but this quarter Microsoft cashed in as Alphabet’s bets cost it dearly.

Microsoft (MSFT) stock rose about 2% after the session, while Alphabet (GOOGL, GOOG) stock fell more than 9%, on track for its worst day since October 2023, after its sales fell short.

For Microsoft, labs appear as sales. OpenAI paid it $10 billion in the quarter ended in September, according to Microsoft’s quarterly filing. That’s about 11% of Microsoft’s $92 billion in revenue, and more than its Xbox and Windows businesses brought in combined.

Horizontal bar chart of Microsoft's revenue sources for the quarter ended September 30, 2026. OpenAI paid Microsoft $10 billion, more than Xbox ($5.4 billion) and Windows OEMs and devices ($3.6 billion) combined. Azure brought in $33.2 billion and the Microsoft 365 cloud brought in $27.8 billion.
Microsoft, Bloomberg, Yahoo Finance

Some of this money is still owed. OpenAI’s unpaid invoices to Microsoft totaled about $7 billion, up from $6 billion three months earlier. Microsoft also owns about 24% of maker ChatGPT, but this time the stake has done little to boost its profits.

The order book has also cooled. Microsoft’s backlog — which customers have signed up for, but Microsoft hasn’t yet booked — fell to about $677 billion, and new bookings fell 12% from a year earlier. CFO Amy Hood blamed the difficult comparison on Azure’s “significant commitments over the past year.”

Alphabet’s bets on labs worked the other way. Its holdings in other companies, including about 14% in Anthropic and part of SpaceX (SPCX), provided about $6 of its second-quarter earnings of $9.11 per share.

This time they cost it. A loss of nearly $9 billion on those holdings reduced earnings by $0.55 per share, to $2.12. Chief Financial Officer Anat Ashkenazi said on the call that the loss came “primarily” from SpaceX, whose shares fell about 12% during the quarter.

Stacked column chart of Alphabet's quarterly earnings per share from the second quarter of 2025 to the third quarter of 2026, separating the company's profit from gains or losses on its holdings in other companies. Investment gains brought EPS to $9.11 in the second quarter of 2026. In the third quarter, a loss on these holdings reduced EPS to $2.12 from around $2.67.
Alphabet, Yahoo Finance

Alphabet is also footing the construction bill. The company spent $51 billion on data centers and equipment during the quarter, more than double a year earlier, and burned through about $9 billion in free cash flow — the cash remaining after those investments — for a second straight quarter. Microsoft generated about $19 billion and said it expects to remain positive this fiscal year.

To make up the deficit, Alphabet repurchased no shares, sold about $29 billion in bonds and $12 billion in new stock, and nearly tripled its long-term debt this year to about $125 billion. Meta (META) took a similar path with its nearly $100 billion stock sale.

The benefits are showing up in Google Cloud, where revenue doubled to about $31 billion and the backlog of signed contracts grew to $561 billion from $514 billion three months earlier. Anthropic has committed at least $115 billion to Google for computing power, according to its IPO filing, or about a fifth of that backlog according to Yahoo Finance calculations.

The next swing could come from Anthropic itself. Its IPO could begin as early as November 16, and once that happens, Alphabet’s stake will be marked to market each quarter. Given the reported valuation of between $1.5 trillion and $2 trillion, this could turn this drag into a boon by the end of the year.

Microsoft CEO Satya Nadella doesn’t want to rely on labs forever. Asked on the call where Azure’s AI growth is coming from, he said he’s looking for scale, not “four customers that buy a lot of capacity from you and you can show a few quarters of growth.”

“It’s not a deal as far as I’m concerned,” he said.

In-house AI tools helped analyze interview transcripts, research, and write this article. Humans reviewed, edited and fact-checked the material before publication.

Jared Blikre is the global markets and data editor for Yahoo Finance. Follow him on @SPYJared or email him at jaredblikre@yahooinc.com.

Click here for in-depth analysis of the latest stock market news and events that move stock prices.

Read the latest financial and business news from Yahoo Finance

Gn bussni

Scroll to Top