NEW YORK — Microsoft and Alphabet are scheduled to report quarterly earnings Wednesday, Oct. 28, giving Wall Street a closely watched assessment of artificial intelligence spending, cloud computing demand and the financial returns from billions of dollars invested in data centers and advanced technology.
The two technology giants are expected to report a combined $218 billion in quarterly revenue, with analysts anticipating continued double-digit sales growth as businesses increase spending on AI infrastructure and digital services.
Investors will be particularly focused on whether the companies can translate rapidly expanding AI investments into sustainable earnings growth while controlling the rising costs of computing infrastructure.
Microsoft (NASDAQ: MSFT) is expected to report fiscal first-quarter revenue of approximately $90.63 billion, an increase of 16.7% from $77.67 billion a year earlier, according to analyst estimates compiled by FactSet.
Adjusted earnings are projected at $4.71 per share, compared with $4.13 in the same period last year, representing growth of approximately 14%.
Alphabet (NASDAQ: GOOGL), Google’s parent company, is expected to report third-quarter revenue of approximately $127.92 billion, up 25% from $102.35 billion a year earlier, according to MarketBeat estimates.
Analysts project Alphabet earnings of approximately $3.03 per share, compared with $2.87 in the prior-year quarter.
Despite expectations for strong revenue growth, investors are increasingly scrutinizing whether the enormous capital expenditures required to develop artificial intelligence will generate sufficient returns.
For Microsoft, the central focus will be its Azure cloud computing business, which has benefited from growing demand for artificial intelligence training, data processing and enterprise software applications.
Azure has become one of Microsoft’s most important growth engines as companies move computing workloads into the cloud and adopt AI-powered business tools.
Investors will examine whether Azure’s growth rate is accelerating and how much additional capacity Microsoft must build to satisfy demand.
Microsoft has also expanded its Copilot artificial intelligence products across Microsoft 365, Windows and enterprise software platforms.
The company is seeking to convert widespread corporate interest in AI into recurring subscription revenue, making customer adoption and spending on Copilot an important measure of its commercialization strategy.
Microsoft reported revenue of approximately $90 billion in its fiscal fourth quarter, supported by growth in cloud services and business software.
Alphabet faces a somewhat different challenge.
While Google Cloud has become an increasingly important source of growth, advertising remains the company’s principal revenue generator.
Investors will closely examine advertising demand across Google Search and YouTube, particularly as artificial intelligence changes how consumers search for information online.
Google has integrated its Gemini AI models into search results and other services, creating new opportunities for user engagement while raising questions about how AI-generated responses could affect traditional search advertising.
Maintaining the profitability of Google’s advertising business while expanding AI functionality remains a significant priority for Alphabet management.
Google Cloud competes with Microsoft’s Azure and Amazon Web Services for corporate customers seeking computing capacity, data analytics and artificial intelligence infrastructure.
Growing demand for AI services has supported cloud revenue, but competition has required substantial investment in data centers, specialized processors and networking equipment.
Alphabet has also invested heavily in its own AI chips, known as tensor processing units, as an alternative to relying entirely on processors supplied by Nvidia.
Those investments could help improve computing efficiency and reduce certain infrastructure costs over time, although the financial benefits will depend on customer demand and utilization.
Both Microsoft and Alphabet face increasing pressure to demonstrate that their aggressive expansion plans can produce returns that justify the capital being committed.
Data center construction requires significant upfront spending on land, buildings, electricity infrastructure, cooling systems and advanced semiconductors.
The rapid expansion has also raised questions about electricity availability and whether infrastructure development can keep pace with projected AI demand.
Higher spending forecasts may indicate strong demand for computing services but could also raise concerns about profit margins and free cash flow.
The companies’ forecasts for the remainder of 2026 and into 2027 will provide additional insight into whether management expects AI-related demand to remain strong.
Alphabet is scheduled to discuss its results Wednesday at 4:30 p.m. Eastern, followed by Microsoft’s earnings conference call at 5:30 p.m. Eastern.