Satya Nadella's Microsoft and Sundar Pichai's Alphabet report tonight, and Azure and Google Cloud carry the AI debate

The AI trade gets its first big report card of the week after the closing bell on Wednesday. Alphabet, led by Sundar Pichai, and Microsoft, led by Satya Nadella, both release quarterly results after the close, with Alphabet's conference call scheduled for 4:30 p.m. ET and Microsoft's webcast for 5:30 p.m. ET. Amazon follows on Thursday.

The timing adds pressure. The Federal Reserve announces its rate decision at 2 p.m. ET, so investors will digest the central bank's message and two of the largest AI spenders on the planet within the same afternoon. Futures were already leaning toward tech before dawn: Nasdaq 100 futures were up between roughly 0.3% and 0.6% depending on the timestamp, according to Investing.com and TipRanks, while Dow futures were about 0.2% lower.

Why these two reports matter

Both companies sit at the center of the question that has moved markets all month: is the money pouring into AI data centers turning into revenue fast enough? A Nasdaq selloff last week was driven partly by those worries, and a run of AI financing deals since then, including Broadcom's $63 billion arrangement tied to chips for Anthropic on Tuesday, has helped soothe them. Tuesday's session ended with the Nasdaq Composite up 1.18% at 26,477.81, according to CNBC.

Cloud growth is the clearest scoreboard. Azure and Google Cloud are where AI demand shows up as sales, and they are also where much of the spending is aimed.

Microsoft: the Azure number

Microsoft gave unusually specific guidance for the quarter that ended Sept. 30, the first quarter of its 2027 fiscal year. It projected revenue of $89.85 billion to $90.95 billion and Azure growth of about 45% in constant currency, according to previews from Pip Theory, GeekWire and Factsheets. Published consensus puts adjusted earnings at about $4.71 a share, up from $4.13 a year earlier.

The bar may be higher than the guidance. GeekWire reported that BNP Paribas analyst Stefan Slowinski wrote that investors are looking for Azure growth of about 46%. Microsoft has also started reporting under a new two-group structure, which GeekWire described as Agents and Infra, covering Azure and Microsoft 365, and Devices and Consumer, covering Windows, Xbox and search advertising. That makes year-over-year comparisons less straightforward this time.

Spending is the other half of the story. Microsoft guided capital expenditures, including finance leases, to more than $50 billion for the quarter. Factsheets noted that some AI infrastructure leases were reclassified from finance to operating leases, which can change how the capex figure reads without a change in the underlying build-out.

The test for Microsoft is not only whether Azure grows, but whether it grows faster than the spending behind it.

Alphabet: revenue near $128 billion, and the cloud margin

Alphabet does not give quarterly guidance, so analyst estimates serve as the benchmark. Consensus calls for revenue of about $128.2 billion, up roughly 25% from $102.35 billion a year earlier, and earnings of about $3.02 a share, according to IG, Investing.com and Benzinga's estimates summary on TradingView.

Google Cloud is where analysts expect the biggest jump. LSEG consensus is for cloud revenue of about $29.6 billion, close to double the year-ago level, according to IG and Reuters. Last quarter, Google Cloud revenue rose about 82% to $24.8 billion. IG noted that individual estimates for this quarter range widely, which reflects uncertainty about how fast new computing capacity turns into sales.

Spending is again the counterweight. Alphabet lifted its 2026 capital expenditure range to $195 billion to $205 billion in July, and its free cash flow turned negative in the second quarter, according to Investing.com and Reuters. That combination, very strong cloud growth paired with very heavy spending, is why the stock sold off after its last report despite solid revenue.

What to watch in each release

• Azure growth versus the roughly 45% Microsoft guided and the higher bar some analysts describe.
• Microsoft's capex figure and any update on spending for the rest of its fiscal year.
• Google Cloud revenue against the roughly $29.6 billion consensus, and the cloud operating margin.
• Any change to Alphabet's $195 billion to $205 billion capex range for 2026.

The rest of the day

The Fed decision at 2 p.m. ET and Chair Kevin Warsh's press conference at 2:30 p.m. come first. Futures pricing points to a hold, with the target range at 3.75% to 4%. The 10-year Treasury yield was near 5.01% before the open, according to CNBC and Benzinga.

After the close, the reports themselves will set the tone for Thursday, when Amazon reports and the government publishes third-quarter GDP and September PCE inflation data. For now, the market has spent two sessions bidding up chip and AI names into these numbers. Tonight shows how much of that optimism the companies writing the biggest checks can back up.