The Newsroom · October 29, 2026
Microsoft Is Rewarded for Azure Growth, Alphabet Is Punished for Negative Free Cash Flow, and Oracle Hedges Its Nvidia Bet — as the AI Industry Moves From Building Capacity to Proving the Returns
Big Tech AI Spending, Cloud Results and the Race for AI Chips
Two sets of results on October 28 gave investors opposite answers to the same question. Microsoft reported Azure growth of 48% and shares rose about 4% in extended trading. Alphabet reported that Google Cloud revenue more than doubled to $30.7 billion, yet its shares fell more than 10% after hours because quarterly free cash flow turned negative. Both are spending heavily on AI. The market rewarded the company whose spending came in below expectations alongside faster growth and punished the one whose cash flow missed.
On October 27, Oracle announced it will expand its Nvidia deal to multi-gigawatt scale while adding Google TPUs and chips from Cerebras and SambaNova, and will use its own networking chips in some systems. Amazon and Intel report after the US close today, which is early tomorrow in Manila, so they appear here as previews, not results.
The Newsroom at a Glance
| Story | Date | Status |
|---|---|---|
| Microsoft Q1 FY27: Azure +48%, revenue $92.3B | Oct 28 | Reported results |
| Alphabet Q3: Google Cloud +103% to $30.7B; free cash flow −$9.1B | Oct 28 | Reported results (8-K) |
| Oracle adds Google TPUs, Cerebras, SambaNova alongside bigger Nvidia deal | Oct 27 | Company announcement; financing not disclosed |
| Amazon Q3 preview | Reports Oct 29 after US close | Preview; no results yet |
| Intel Q3 preview | Reports Oct 29 after US close | Preview; no results yet |
| Anthropic security test via third-party software | Oct 26, updated Oct 28 | Authorized test; parties dispute details |
Top Technology Headlines
Microsoft's Azure Growth Accelerates to 48% as Spending Lands Below Expectations
Reported results (October 28): For its fiscal first quarter ended September 30, Microsoft reported revenue of $92.3 billion, up 19%, operating income of $45.9 billion, up 21%, and GAAP net income of $36.6 billion, up 32%, or $4.92 per share, per CNBC and GuruFocus. Microsoft Cloud revenue was $63.9 billion, up 30%. Azure revenue rose 48%, accelerating from 42% in the prior quarter, and for the first time Microsoft disclosed Azure revenue in dollars: $33.17 billion. Shares rose about 4% in extended trading.
The spending side: Microsoft reported $45.2 billion of capital expenditures including finance leases, up about 30% from a year earlier. Free cash flow fell 27% to $18.63 billion. Outlets report capex on different measures: one summary cites $39.4 billion spent on property and equipment, a cash measure, while other coverage said analysts expected spending of about $46 billion. Microsoft had guided to above $50 billion including a lease-reclassification effect, so spending came in lower than its own outlook.
Management guidance: On the call, per a Benzinga transcript, Microsoft guided second-quarter revenue of $96 billion to $97.1 billion and Azure growth of 49% to 50% in constant currency. CFO Amy Hood said fiscal second-quarter capex including finance leases should exceed $50 billion, below the StreetAccount consensus of $53.1 billion cited by CNBC, and that spending should accelerate in the second half mainly for CPUs, memory, storage and GPUs, including third-party capacity deliveries that shifted later. Microsoft also changed its reporting to two segments, Agents and Infra, and Devices and Consumer.
The CODEW analysis: Faster Azure growth on lower-than-guided spending supports the case that capacity already built is earning revenue, which is what investors want to see. The caveat is that guidance points to heavier spending in the second half, and capacity constraints still cap growth.
Connect to: Microsoft Company Analysis · Cloud Computing Watch · Enterprise AI Intelligence
Google Cloud Revenue Doubles to $30.7 Billion, but Free Cash Flow Turns Negative
Reported results (October 28, from Alphabet's 8-K): Alphabet's release reports third-quarter revenue up 25% to $127.6 billion, operating income up 30% with a 31.8% operating margin, net income to common stockholders of $26.2 billion and EPS of $2.12. Google Cloud revenue rose 103% to $30.7 billion, with TPU system sales a meaningful contributor. Google Services revenue rose 11% to $96.3 billion, with Search and other up 12%. Alphabet said the Gemini app has reached one billion users.
Cash and spending (as reported): Fortune reports capex of $51.4 billion, against $24 billion a year earlier, and free cash flow of negative $9.1 billion, compared with negative $5.9 billion in the second quarter. CNBC says analysts had expected free cash flow of negative $2.7 billion and capex of $55.1 billion, and that Alphabet held its 2026 capex outlook unchanged while expecting a significant increase in 2027. Fortune cites about $200 billion for 2026 and $300 billion for 2027; check those figures against the call transcript. Revenue was roughly in line with the $127.9 billion consensus cited by Fortune. Shares fell more than 10% in after-hours trading. Fortune notes these are Alphabet's first full results since an $84.8 billion equity raise in June, which included $10 billion from Berkshire Hathaway.
Demand signal: Google Cloud CEO Thomas Kurian, in his first public earnings-call remarks, described extraordinary demand from AI labs, capital markets firms, financial institutions and enterprises, per CNBC.
What the results show and what they don't: They show very strong AI infrastructure demand, with Cloud growth accelerating from 63% in the first quarter to 82% in the second and 103% now. They do not show that the spending is paying back: operating cash flow of $42.3 billion was below capex of $51.4 billion for the second straight quarter. The market's reaction suggests that investors want cash generation to keep pace with growth.
Connect to: Company Intelligence (Alphabet) · Cloud Computing Watch · AI Infrastructure Watch
Oracle Expands Beyond Nvidia With Google TPUs and Inference Chips
What happened (October 27, company announcement): Reuters reported that Oracle is expanding its cloud AI chip deals with Nvidia while adding offerings from Nvidia rivals including Google and Cerebras. Oracle and Nvidia will scale cloud infrastructure to a multi-gigawatt level using Nvidia's Vera Rubin systems, per Channel NewsAsia. Oracle will also offer Google TPUs, available in 2027 and described as the first time a hyperscaler offers them outside Google Cloud, plus inference chips from Cerebras, with deployment from the first half of 2027, and SambaNova. Some Nvidia-based systems will use Oracle's own Acceleron networking chips in place of some Nvidia networking silicon.
What is not disclosed: Oracle did not say how it will finance the chip purchases. Per Reuters, it said last month that customers increasingly pay for chips and kept its fiscal 2027 capital spending target at about $90 billion to $95 billion. Oracle shares rose about 4% to 5% ahead of an investor day this week. Cerebras's CEO told Reuters the partnership would significantly expand its top-tier customer base and that adopting more chips does not signal reduced reliance on Nvidia.
Why it matters: Training is dominated by Nvidia, but inference, where models answer users and run agents, is more open, and cloud providers want leverage on price and workload fit. A Moor Insights analyst called it an aggressive expansion to support multiple architectures. Google gains too: Alphabet's results cite TPU system sales as a growth contributor, and Oracle gives TPUs a third-party home. Using its own networking silicon could also let Oracle keep more of the margin inside each Nvidia-based system, which is the CODEW's reading, not an Oracle claim.
Connect to: Semiconductor Intelligence · Hardware Watch · Cloud Computing Watch
Semiconductors and Infrastructure: Previews
Amazon Earnings Preview: Can AWS Turn AI Demand Into Profitable Growth?
Status: Amazon reports third-quarter results after the US market close on October 29, which is early October 30 in Manila. No results were available when this was written, so everything below is background and expectations.
Management guidance (from Amazon's prior release): Net sales of $197 billion to $202 billion, up 9% to 12%, and operating income of $22.5 billion to $26.5 billion, per a Zacks summary of the guidance. In the second quarter AWS revenue grew 37% to $42.2 billion, its fastest growth in 18 quarters, with a reported backlog of $496 billion. Amazon raised its 2026 cash capex outlook to about $220 billion in July, per a CoinDCX preview, and management has said power capacity will remain short through 2027 per a Pepperstone preview.
Analyst estimates (not company figures): Consensus for Q3 AWS revenue is about $45.4 billion, roughly 37.5% growth, per Zacks. Estimates vary: the market estimate is 38% with Bank of America at 40%, and one preview expects 30% to 35%. The questions are whether AWS growth holds, whether margins stay strong without the second quarter's one-offs, and whether the capex outlook rises again.
Connect to: Cloud Computing Watch · Company Intelligence (Amazon)
Intel Earnings Preview: Data-Center Demand, Gross Margin and Foundry
Status: Intel reports after the US close on October 29, with its call at 5:00 p.m. ET, which is about 5:00 a.m. in Manila on October 30. No results were available when this was written.
Management guidance: Revenue of $15.8 billion to $16.8 billion, adjusted EPS of $0.38 and a gross margin of 42% at the midpoint, per Benzinga. In the second quarter, Intel's revenue rose 25% to $16.1 billion, and its data-center and AI division grew 59% to about $6.3 billion, per Poland Insight.
Analyst estimates (not company figures): Consensus is about $0.40 EPS on roughly $16.5 billion of revenue, per Alphastreet, with options traders pricing a move of about 9% either way. The focus is gross margin against the 42% guide, the fourth-quarter outlook, foundry losses and signs of outside foundry customers. A Wedbush analyst expects stronger server demand but warns that weaker PC demand and rising memory and substrate costs could limit the size of a beat. Intel's reported agreement to acquire quantum software company Classiq, covered in yesterday's Newsroom, is a separate announcement from October 26.
Connect to: Semiconductor Intelligence · Hardware Watch
Cybersecurity
Anthropic Security Test Highlights Third-Party Software Risk
What was reported (first reported October 26, updated October 28): The Washington Post reported, citing a draft report, that security startup Cathedral said its AI agents reached Anthropic's internal systems in under 12 hours through vulnerabilities in third-party business software. The work was done through Anthropic's outside-researcher program, so it was an authorized test, not a confirmed criminal breach.
Cathedral's claims: Its draft report says researchers reached meeting transcripts, salary and job-offer details and Slack messages about Anthropic's advanced models, per Cybersecurity News. Cathedral says it kept data access to the minimum needed and followed security research practice.
Anthropic's statements: Anthropic confirmed researchers reached a limited set of sales, HR and IT systems, including business contact information and some basic user account records, but said they did not access Claude conversations, source code or model weights, per Gizmodo. It said its monitoring flagged some activity before Cathedral reported it, that it found no evidence anyone else used the weaknesses, and that Cathedral overstated national security implications and did not fully follow program rules by failing to disclose all its activity. The Decoder reports that Anthropic closed the affected access points the same day, disabled the third-party tools until vendors fixed the flaws, and notified US officials. Anthropic red teamer Logan Graham said Cathedral probed Anthropic's own systems for days before turning to third-party software, and that it found two vulnerabilities but reported one. The two sides disagree on the duration, scope and rules. The vendors and flaws were not named.
Why it matters: Enterprise AI security depends on identity controls, connected applications and internal permissions as well as model safeguards. It echoes this month's ConnectWise incident covered in Cybersecurity Watch (October 26), where access came through a vendor credential. For any organization, the practical step is the same: inventory third-party tools with administrative access, limit their permissions and watch their activity.
Connect to: Cybersecurity Watch · Enterprise AI Intelligence
Why It Matters: From Building Capacity to Proving Returns
The CODEW analysis: For two years the AI industry has been judged on how much capacity it could build. This week's results suggest the test is shifting to whether that capacity earns a return. Microsoft showed faster cloud growth and spending below its own outlook, and investors paid for it. Alphabet showed even faster cloud growth, but capex above operating cash flow, and investors sold.
The chip market is broadening. Oracle's decision to add Google TPUs, Cerebras and SambaNova while still expanding with Nvidia shows cloud providers hedging on inference cost, supply and bargaining power. Alphabet's TPU sales and Intel's data-center growth are part of the same picture.
Funding is moving to capital markets. Alphabet's $84.8 billion equity raise in June and Meta's proposed $95 billion plan covered on The Newsroom October 27 mean the cost of capital is now part of the AI story.
What to Watch Next
- Amazon's results. AWS growth against the 37% of the second quarter and the roughly 38% market estimate, the capex outlook and capacity commentary.
- Intel's results. Gross margin against the 42% guide, fourth-quarter guidance, data-center growth and foundry losses.
- Oracle's investor day. Any financing detail for the new chip purchases and updated financial targets.
- Alphabet's and Microsoft's capex path. Whether 2027 spending guidance is confirmed on the calls, and how the second-half acceleration at Microsoft is financed.
- Anthropic's IPO terms. Price range, share count and roadshow timing, which Bloomberg has said could start the week of November 9.
- The Cathedral dispute. Any published report, vendor disclosure or official response.
The CODEW Stat
$51.4 billion vs. $42.3 billion — Alphabet's third-quarter capital expenditures against its operating cash flow, per its reported figures. Google Cloud revenue doubled in the same quarter, and the shares still fell by about a tenth after hours. The gap between what AI infrastructure costs and what the business generates in cash is now the number the market is reading first.
Sources: Alphabet's 8-K, Microsoft results as reported by CNBC and others, Reuters, Fortune, The Washington Post, company guidance as reported by Benzinga, Zacks and others, covering October 26 to 29, 2026. Where a story is relayed through a secondary outlet, the item says so.
Reported results, management guidance, analyst estimates and The CODEW's own analysis are labeled separately. Amazon and Intel items are previews and contain no reported results. Share moves are after-hours and change quickly; verify figures against company releases before publication. This series does not provide investment advice.
Reviewed by Erwin Castro
on
Thursday, October 29, 2026
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