Cash flow is king again. Wall Street rewarded Microsoft and Oracle on Wednesday for showing that they could fund their enormous AI ambitions without endlessly tapping investors, while Alphabet was punished for burning through cash and Google Search's slower growth fanned fears that competition was hurting the business that bankrolls its AI expansion.
The divergence shows that after rewarding companies for spending aggressively to secure computing capacity — often through debt — investors are demanding more evidence that those investments are generating returns. The split reflects a broader shift: as more businesses move beyond experimenting with the newest or most powerful AI models and commit to long-term contracts, the market is drawing a sharper distinction between companies making money from AI and those struggling to contain its costs.
Microsoft shares rose more than 2% in premarket trading on Thursday, while Alphabet plunged nearly 11%, as investors drew a sharper distinction between companies making money from AI and those struggling to contain its costs. "The shiny object stuff is waning" as more businesses move beyond experimenting with the newest or most powerful AI models and commit to long-term contracts, Microsoft CEO Satya Nadella said in a conference call with analysts. "I want the breadth," he said. "We have large customers who want to buy from us ... As long as the pricing is right, we may sell them some. If not, we will be patient about building the breadth business."
