Alphabet’s Capital Spending Hits $51.36 Billion, Below Estimates, as Chip Stocks Fall
Key Facts
Micron closed at $940.62 on Oct. 29, down from $983.23 in the previous session, as semiconductor stocks fell 2.0%, according to EL7 and Reuters data. The sector came under pressure as investors reassessed major technology companies’ spending on artificial intelligence after capital expenditures at Alphabet and Microsoft fell short of analyst estimates. Reuters said chip stocks were on track to end a four-session winning streak, with investors distinguishing between companies able to fund their AI ambitions and those burning cash or borrowing to pursue them. In the same session, the Nasdaq Composite fell 1.4%, while the S&P 500 declined 0.3%, according to the Associated Press. The sector’s decline alone does not establish a change in demand for Micron’s products, but the stock’s performance placed it within a broader reassessment of returns on spending for AI infrastructure.
Alphabet’s capital expenditures totaled $51.36 billion in the third quarter, up 114% year over year but below the market estimate of $55.78 billion, according to FXLeaders. The company’s filing with the Securities and Exchange Commission said capital expenditures were $51.4 billion in the three months ended Sept. 30, primarily reflecting investments in technical infrastructure. The figures show substantial and growing spending even though it missed market estimates; the concern was therefore not simply the level of investment, but also its cash impact as investors watched how quickly spending would translate into revenue. Reuters reported that Alphabet’s free cash flow posted a deficit of $9.1 billion in the third quarter, compared with analysts’ expectations that it would be near breakeven. Reuters added that the company’s revenue miss, alongside accelerating cash spending tied to AI, weighed on the stock.
At Microsoft, spending on capital expenditures and finance leases totaled $45.2 billion in fiscal first-quarter 2027, compared with analyst expectations of $50.7 billion, according to FXLeaders. At the same time, the company’s results showed strong growth in its cloud business: Azure revenue rose 48% in the quarter ended Sept. 30, and Microsoft Cloud revenue reached $63.9 billion, up 30%, according to the company’s statement. The divergence provides context for the market debate: demand for cloud services continued to grow, while actual spending remained below estimates. An analyst quoted by Reuters said investors had begun scrutinizing the timing of AI returns against capital-spending rates. He added that some investors were no longer giving major cloud-computing companies “unlimited spending freedom.”
Alphabet’s third-quarter results showed broad revenue growth, with consolidated revenue rising 25% to $127.6 billion and Google Cloud revenue increasing 103% to $30.7 billion, according to the company’s filing. But cloud growth did not prevent the stock from falling; Reuters said Alphabet shares dropped 13.2% on Oct. 29, as concerns about AI spending returned to the market after the revenue miss and a widening free-cash-flow deficit. In separate coverage, Reuters said the stock fell 13% and was on track for its biggest one-day decline ever, as search advertising results weakened and cash spending tied to AI rose. Meanwhile, Samsung reported record quarterly revenue of 195.3 trillion won in the third quarter, up 14% from the previous quarter, and operating profit of 107.4 trillion won. The company said its memory business also posted record revenue and operating profit, and that demand for semiconductors was expected to remain strong.
On its spending trajectory, Alphabet said it still expects capital expenditures to increase significantly in 2027, with more details to be provided during its fourth-quarter earnings call, according to the Associated Press. The guidance puts market expectations for spending in the context of continued investment, even though actual third-quarter spending came in below estimates. The company’s details on the call will be a later milestone for assessing its plans, according to its announcement. Available session data for Micron shows a close of $983.23 on Oct. 28 and $940.62 on Oct. 29; it does not by itself establish that the stock traded at other levels during the session. In the broader market, the reassessment focused on technology companies’ ability to fund their AI ambitions and the timing of returns from those investments.