Two of the United States' largest technology companies reported robust revenue growth in their latest quarterly results, underscoring the continued impact of artificial intelligence and cloud computing on the sector.
However, while Microsoft delivered sharp profit gains, Alphabet reported a decline in earnings despite posting record revenue.
Alphabet, the parent company of Google, reported revenue of $127.6 billion for the July-September quarter, an increase of 25 per cent from the $102.3 billion recorded during the same period a year earlier.
Despite the strong top-line performance, net profit fell to $26.2 billion, down roughly 25 per cent from the $34.98 billion reported in the third quarter of 2025.
Earnings per share also declined, dropping from $2.87 a year ago to $2.12.
The company reported negative free cash flow of $9.1 billion during the quarter, reflecting continued heavy spending as competition in artificial intelligence intensifies.
Sundar Pichai, Alphabet's chief executive, said AI investments are helping drive activity across the company's core businesses.
According to Pichai, artificial intelligence has contributed to increased usage of Google Search, including business-related searches, helping push annual query growth to its fastest pace in five years.
The strongest performance came from the company's cloud division. Revenue at Google Cloud more than doubled, jumping 103 per cent to $30.7 billion as demand for AI infrastructure and related services accelerated.
Pichai also highlighted the rapid adoption of the company's AI products.
The Gemini application has reached 1 billion users, making it the fastest-growing product in Google's history, he said.
Meanwhile, subscriptions to YouTube Music and YouTube Premium, including trial users, have surpassed 150 million worldwide, providing what Pichai described as significant growth opportunities for the company.
Microsoft also reported strong quarterly results, with both revenue and profit exceeding market forecasts.
The company, which treats the three months ending September 30 as the first quarter of its 2027 fiscal year, generated $92.3 billion in revenue, up 19 per cent from $77.7 billion during the same period last year.
Net income rose even faster, increasing 32 per cent to $36.6 billion from $27.7 billion a year earlier.
Earnings per share improved from $3.72 to $4.92.
The software giant continued its aggressive investment strategy, spending $45.2 billion on capital expenditures during the quarter as it expands data centre capacity and AI infrastructure.
Satya Nadella, Microsoft's chief executive, said the company continues to help customers build and manage artificial intelligence systems while offering greater flexibility across its technology platforms.
“We are translating our innovation into increasingly high adoption rates and tangible real-world impacts across every sector,” Nadella said.
A major contributor to the company's growth was its cloud business.
Amy Hood, Microsoft's chief financial officer, said cloud revenue increased 30 per cent to $63.9 billion during the quarter.
“We exceeded expectations in all three categories: revenue, operating profit, and earnings per share,” Hood said.
The results highlight how artificial intelligence is increasingly driving competition among major technology companies.
Both Alphabet and Microsoft have poured billions of dollars into expanding AI capabilities, developing new products and building the computing infrastructure required to support rapidly growing demand.
While the two companies followed different profit trajectories during the quarter, investors will likely focus on the common theme underlying both sets of results: strong demand for AI services and cloud computing continues to transform the business models of the world's largest technology firms.
The contrast is particularly striking. Alphabet delivered faster revenue growth but saw profits decline, while Microsoft managed to combine double-digit revenue expansion with significant earnings growth, reflecting the different costs associated with each company's AI strategy and investment cycle.
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