Alphabet sheds $500 billion as AI spending spooks Wall Street

The week's earnings reports from Alphabet, Amazon and Microsoft offered a split screen on the AI boom. Alphabet's Google Cloud revenue more than doubled in the third quarter, yet earnings and revenue missed expectations, and the stock posted the worst trading day in the company's history—a signal that even booming cloud growth can be outweighed by concerns about search sluggishness and heavy capital expenditures of $51.4 billion. Amazon similarly showed high demand for AI-tied cloud services, but its aggressive spending pushed free cash flow deeply negative, swinging from positive $14.8 billion to negative $42.4 billion over the past year, and it reiterated plans for about $220 billion in 2026 capital expenditures. Microsoft, by contrast, delivered a top and bottom line beat, with Azure growing 48% and CFO Amy Hood projecting about $170 billion in calendar-year 2026 capital expenditures, noting that demand still exceeds supply. The mixed results underscore a central tension for investors: whether AI investments will generate returns commensurate with their enormous costs, a question likely to persist when Apple reports on Monday.