Microsoft beats while Alphabet drops after hours — investors split on AI capex cash flow

Tonight's megacap cloud earnings are landing as a deliberate split, not a sector-wide verdict. Microsoft delivered profit growth near one-third year over year while continuing to spend heavily on datacenters and AI capacity, yet still reported positive free cash flow in the quarter. That outcome validates the bull argument that hyperscale balance sheets can absorb capex without breaking the cash-generation story — at least for one print.

Alphabet's after-hours decline of roughly 8% pushes the other side of the trade: weaker trailing free cash flow and a disappointing headline number tell investors that not every AI leader converts spend into near-term cash the same way Oracle's forward FCF guide implied. For index investors, the implication is dispersion inside QQQ, not a simple risk-on or risk-off read. Watch whether Microsoft holds its after-hours bid and whether Alphabet stabilizes once capex guidance is parsed — that pairing sets the tone for software and semiconductor beta into the rest of earnings season.