Alphabet Shares Rise While Microsoft and Meta Slide After Mixed Third-Quarter Reports

Shares of three members of the so-called “Magnificent Seven” moved in different directions during Wednesday’s after-hours session as Alphabet Inc., Microsoft Corp. and Meta Platforms Inc. released their fiscal third-quarter results. The numbers highlighted continued heavy spending on artificial intelligence, widening capital expenditure forecasts and a sizeable one-time charge at Meta.

Alphabet tops revenue estimates and lifts spending outlook

What happened: Alphabet, the parent company of Google, reported third-quarter revenue that exceeded Wall Street expectations, sending its stock up 6.2 percent in extended trading.

Key figures: The search and advertising giant said total revenue surpassed the $100 billion mark for the quarter. The company also raised its full-year capital expenditure forecast to a range of $91 billion to $93 billion, well above analysts’ consensus of $80.67 billion. Management attributed the higher spending outlook to continued investment in data centers and other infrastructure that supports both its core advertising services and its fast-growing cloud computing division.

Context: Alphabet has poured significant resources into artificial intelligence initiatives, integrating generative AI tools across its advertising, search and cloud products. The stronger-than-expected top-line results suggested that demand for those AI-driven services, alongside traditional search advertising, remained solid through the September quarter.

Microsoft revenue beats forecasts but shares retreat

What happened: Microsoft reported a further acceleration in its cloud business, delivering quarterly revenue that beat analyst estimates. Despite that performance, the stock declined 3.4 percent in after-hours trade.

Key figures: The company’s Azure cloud division again posted double-digit growth, underpinning total revenue that surpassed consensus forecasts. Microsoft highlighted “blockbuster” gains from enterprise demand for artificial-intelligence tools, reinforcing management’s view that spending on AI remains a priority for corporate customers.

Context: Investors have closely watched Microsoft’s AI strategy following multibillion-dollar investments in both proprietary research and partnerships. While the latest results confirmed strong cloud adoption, traders appeared concerned about the pace of future spending and the potential impact on margins. Microsoft reiterated that AI-related services require substantial ongoing investment in servers, networking equipment and data centers.

Meta sinks on hefty one-time charge and higher capex plans

What happened: Meta Platforms shares fell more than 8 percent in after-hours trading. The social-media company disclosed a nearly $16 billion one-time charge linked to U.S. President Donald Trump’s “Big Beautiful Bill,” a measure that created an extraordinary tax liability for large technology companies.

Key figures: Alongside the charge, Meta said next year’s capital expenditures would be “notably larger” than 2025’s already elevated level. Current guidance calls for spending of $70 billion to $72 billion this year, driven largely by construction of multiple AI-specific data centers.

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Context: Chief Executive Mark Zuckerberg has directed aggressive hiring of AI researchers and engineers and has repeatedly stated that the company may ultimately invest “hundreds of billions of dollars” to build infrastructure aimed at supporting advanced AI and superintelligence projects. The new capex forecast signals that management remains committed to that trajectory despite the short-term financial hit.

Investor perspective on soaring AI outlays

Market participants parsed the trio’s numbers for signs that mounting AI investments are translating into durable revenue gains. Michael Ashley Schulman, chief investment officer at Running Point Capital in Los Angeles, said the latest earnings wave indicates that AI spending is “being somewhat vindicated” but warned that markets will ultimately judge how efficiently companies convert those outlays into predictable returns. He observed that, while the sector’s fundamentals remain strong, share prices can move faster than the underlying cash flows.

According to Schulman, Alphabet’s ability to exceed $100 billion in quarterly revenue while raising its capex plan underscores the “real” nature of the AI land grab. He added that Microsoft continues to position its enterprise cloud as a key toll road for AI adoption, and that Meta’s sizeable tax charge and even larger spending budget illustrate the significant costs of competing at the frontiers of artificial intelligence.

Broader implications and regulatory backdrop

The enormous capital commitments spotlight the growing strategic importance of AI infrastructure. Regulators worldwide are examining how the largest technology companies deploy data and compute power, an issue that has prompted frequent disclosures in U.S. Securities and Exchange Commission filings. Analysts note that future earnings reports are likely to place even greater emphasis on the balance between innovation, regulatory compliance and shareholder returns.

After-hours market snapshot

• Alphabet (GOOGL): +6.2 percent

• Microsoft (MSFT): –3.4 percent

• Meta Platforms (META): –8.0 percent

The divergent moves underscore investors’ selective response to each company’s combination of revenue growth, profitability and spending plans. With AI investments playing an increasingly central role in corporate strategies, the next quarters are expected to test whether the heavy capital flows can generate sustained earnings momentum.

Crédito da imagem: Reuters