Nebius shares fall 4.7% as Microsoft spending misses expectations amid strong cloud growth
Key Facts
Nebius shares fell 4.7% in morning trading on October 29 after Microsoft reported capital spending below analysts’ average forecast of $50.7 billion for fiscal first-quarter 2027, according to Investing.com. The move highlighted the sensitivity of specialized cloud infrastructure companies to spending plans at their largest potential customers. But Microsoft’s result alone does not prove that demand for AI and cloud services is slowing. Alphabet’s results for the third quarter showed a mixed picture, with purchases of property and equipment rising alongside strong growth in Google Cloud. Alphabet shares also fell more than 10% in after-hours trading on October 28, as revenue came in below analysts’ average forecast.
Alphabet’s purchases of property and equipment totaled $51,355 million in the quarter ended September 30, 2026, according to the company’s filing with the U.S. Securities and Exchange Commission. In the same period, consolidated revenue rose 25% to $127.6 billion, the filing showed. But revenue came in at $127.58 billion, below analysts’ average forecast of $127.97 billion, according to the Associated Press. This points to a divergence between business growth and beating quarterly expectations: the company recorded annual revenue growth but fell short of market estimates. Capital spending reflects purchases of property and equipment during the period, while service revenue remains another indicator of the pace of business activity.
By contrast, Google Cloud posted record revenue of $30.7 billion, up 103% year over year in the third quarter, according to Alphabet’s filing. The company said growth was driven by strength in AI infrastructure and enterprise solutions. Chief Executive Sundar Pichai described infrastructure and AI solutions as “the primary drivers of cloud growth,” according to the Associated Press. The results provide evidence that Alphabet’s cloud business continues to expand alongside substantial capital spending. But they did not prevent the shares from falling after the close, as the Associated Press reported that revenue was slightly below analysts’ estimates.
Pressure in Alphabet’s results extended to earnings: net income was $26.17 billion in the third quarter of 2026, compared with $34.98 billion in the same period a year earlier, according to the Associated Press. Earnings per share were $2.12, affected by an $8.7 billion loss on equity investments that reduced earnings per share by 55 cents. Analysts had estimated earnings per share at about $3.01, the news agency said. These items help explain the market’s reaction to the results alongside revenue and spending, as annual profit declined and earnings per share fell short of estimates. In after-hours trading on October 28, the shares fell more than 10% to $289.95, according to the Associated Press.
While Google Cloud’s results showed strong demand for infrastructure and enterprise AI solutions, spending and the timing of its conversion into capacity and revenue remain central to investors’ assessment of corporate results. Alphabet said it still expects capital expenditures to rise “significantly” in 2027, according to the Associated Press. The company added that it would provide more details during its fourth-quarter earnings call. Upcoming guidance should clarify the spending path the company intends to pursue in the following year. As a result, the market’s attention is turning to companies’ upcoming guidance on infrastructure investment and how closely it is tied to cloud business growth.