Alphabet and Microsoft diverge on valuation and growth: Alphabet trades at lower multiples with faster cloud growth; Microsoft offers higher margins and contracted revenue visibility for retirement investors.

Alphabet trades at a P/E of 17 with an earnings yield of 6% and a price-to-free-cash-flow multiple of 30, while Microsoft trades at a P/E of 34, an earnings yield of 3%, and a P/FCF of 48. Alphabet is up 20% year to date, while Microsoft is down 4%.

Google Cloud posted $20.03 billion in Q1 2026 revenue, growing 63% year over year, while Microsoft's Azure grew 40% in fiscal Q3 2026. Microsoft's commercial remaining performance obligations stand at $627 billion, up 99% year over year—contracted future revenue.

Microsoft has an operating margin of 46% versus Alphabet's 32%, and yields 1% dividend versus Alphabet's 0%, with a 23-year dividend record since 2003. Alphabet initiated a dividend in 2024 and delivered a 5% raise to $0.22 quarterly.

For retirement-focused investors, Microsoft is recommended for its combination of fatter margins, contracted revenue visibility, and dividend durability. For value-tilted growth investors, Alphabet wins on lower valuation multiples and faster cloud growth, though 2026 CapEx guidance of $175 billion to $185 billion pressures free cash flow.