The two cloud giants reported opposite results Wednesday.

According to CNBC, Microsoft shares rose 4% in extended trading after it topped estimates on both lines: adjusted EPS of $4.89 versus $4.73 expected, and revenue of $92.28 billion versus $90.69 billion, with revenue up 19% year over year in the quarter ended Sept. 30.

Investor's Business Daily reports that Alphabet, reporting the same quarter ended Sept. 30, missed Wall Street's earnings targets amid investment losses while revenue roughly met views, and search advertising revenue missed estimates and decelerated for a second straight quarter.

The surprise is that both companies spent heavily on AI infrastructure, yet only Microsoft converted that spend into above-consensus growth.

CNBC notes Microsoft disclosed Azure dollar revenue for the first time, at $33.17 billion, beating the $32.32 billion StreetAccount consensus, with 48% growth accelerating from 42% in the June quarter.

Meanwhile, IBD says Alphabet's cloud computing growth soared as expected, but the search advertising shortfall dragged the whole report down.

The result sent the stocks in opposite directions, with CNBC reporting Microsoft up about 10% year to date versus a 13% S&P 500 gain, and IBD noting Alphabet stock plummeted as the Nasdaq sold off Thursday ahead of inflation data.

The AI build-out is straining balance sheets unevenly. CNBC reports Microsoft spent $45.2 billion on capital expenditures and finance leases in the quarter, up about 30% from a year earlier, and free cash flow still declined 27% to $18.63 billion.

That compares favorably to rivals: CNBC says Alphabet reported more than $9 billion in negative free cash flow, after Meta said last week its cash flow turned negative for the first time.

CFO Amy Hood said Microsoft will keep generating free cash flow through fiscal 2027 and may tap debt markets when attractive, per CNBC. Hood also said capex should top $50 billion next quarter and reach $170 billion for calendar 2027 because of third-party capacity delays.

Microsoft kept the momentum going with guidance above consensus.

CNBC reports it called for $96 billion to $97.1 billion in fiscal second-quarter revenue, implying 18.8% growth at the midpoint versus the $95.60 billion analysts predicted, and Hood guided Azure to 49% to 50% constant-currency growth next quarter, saying demand still exceeds supply.

CNBC also notes Microsoft flagged a 4,800-job cut in the quarter and Monday announced buyouts for up to 60,000 employees to balance the AI build-out with capital efficiency.

With Alphabet stock tumbling and the Nasdaq selling off ahead of a key inflation reading, per IBD, the earnings divergence now feeds directly into Thursday's market sentiment.