Microsoft, Alphabet results: Azure up 48%, Google Cloud doubles on AI demand

Microsoft and Alphabet, Google's parent company, reported their latest quarterly results on Wednesday, October 28, 2026, and both showed cloud computing growing at its fastest pace in years alongside a steep rise in spending on artificial intelligence (AI) infrastructure. Microsoft said revenue for its July-September quarter rose 19% to about $92.3 billion, with its Azure cloud platform up 48%. Alphabet reported third-quarter revenue up 25% at $127.6 billion, with Google Cloud revenue more than doubling, but its heavy spending pushed free cash flow below zero, and its shares fell sharply in after-hours trading.

"Cloud" here means renting computing power, storage and software over the internet instead of running one's own servers. AI tools such as chatbots and coding assistants run on huge clusters of specialised chips in data centres, and most companies rent that capacity from a handful of providers, chief among them Microsoft and Google. The two companies' results are therefore a direct reading of how fast businesses around the world are adopting AI.

On that measure, demand is very strong. Google Cloud's revenue more than doubled in a year, and Microsoft's Azure grew faster than analysts had expected. Both companies also reported very large backlogs, meaning contracts customers have signed but not yet paid out in full, which suggests demand will continue for some time.

The other side is cost. Building data centres, buying chips and securing electricity takes enormous sums before any revenue arrives. Alphabet spent more than twice as much on capital projects as a year ago, enough to turn its free cash flow, the cash left after running the business and investing, negative for the quarter. Investors reacted by selling Alphabet shares after the report, a sign that markets now want proof that this spending will pay off, not only evidence of demand.

For India, the results matter in two ways. Indian companies, start-ups and government projects are large buyers of cloud and AI services, so the pace of investment by these providers affects the capacity, prices and features available to them. And the global race to build AI infrastructure shapes demand for the engineers, data centre builders and IT services firms that India supplies. The companies' own statements on India-specific investment were not part of these results.

Short-term: The results confirm that AI demand is lifting cloud revenue sharply, but Alphabet's negative free cash flow has made investors more cautious about how much the biggest companies are spending.

Long-term: With Alphabet signalling even higher spending in 2027 and Microsoft's backlog at $677 billion, the build-out of AI data centres looks set to continue, keeping pressure on chip supply, electricity and returns.

Who is affected: Businesses and developers that rent cloud and AI services, investors in big technology shares, chipmakers and data centre suppliers, and technology workers whose jobs depend on AI and cloud projects.

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