In the ongoing Q4 2025 earnings season, Microsoft (MSFT) and Alphabet (GOOGL) reported strong results but faced mixed investor reactions amid significant capital expenditures (CapEx) aimed at AI and cloud investments. Microsoft achieved an adjusted EPS of $4.14, up 24% year-over-year, with revenues reaching $81.3 billion (17% increase). Despite this, a slowdown in Azure growth and high CapEx of $37.5 billion raised investor concerns.
Alphabet reported an adjusted EPS of $2.82, a 31% increase, alongside an 18% rise in sales. Google Cloud revenues surged 48% to $17.7 billion, indicating strong demand in enterprise AI solutions. The company anticipates 2026 CapEx investments between $175 billion and $185 billion, reflecting its aggressive strategy in the AI sector.
While both companies saw their stocks underperform relative to the S&P 500, analyst outlooks for their earnings have improved, signaling potential future growth as they navigate the complexities of AI investments.
