Episode summary
Bloomberg Businessweek Daily: Alphabet, MSFT Earnings (Podcast)
Bloomberg Businessweek Daily
· · Hosts: Ed Ludlow · Guests: Anurag Rana, Alison Dooher, Omar Aguilar, Lisa Salvi
Summary
Microsoft and Alphabet’s latest quarterly results framed a sharp contrast in how investors are judging big AI spend. Microsoft posted a broad beat, with better-than-expected adjusted EPS, revenue, Azure growth and cloud revenue, while also keeping CapEx lower than feared. Alphabet, by contrast, missed on search and other revenue, missed on advertising, and saw its shares fall more than 7% in after-hours trading even as Google Cloud was strong and Gemini usage and token processing were growing.
The discussion centered on what matters most now: free cash flow, cloud backlog, and whether AI is improving the economics of core businesses. The host and analysts argued that Microsoft’s backlog and OpenAI-related revenue stream look more durable, while Alphabet’s search franchise remains its golden goose but is under pressure to prove that AI increases usage without weakening monetization. Alphabet’s negative free cash flow and large CapEx plan added to investor concern.
The episode then shifted to Schwab IMPACT in Boston, where a Schwab executive said the industry is facing a major talent gap and a changing advisory model. The guest argued AI will augment administrative work and marketing, but human judgment, relationship skills, and emotional intelligence will matter even more as firms recruit the next generation of advisors.
Key takeaways
- Microsoft’s earnings beat was supported by Azure growth, strong cloud revenue and lower-than-feared CapEx, which the analysts said investors liked.
- Alphabet’s miss was concentrated in search and advertising, even though Google Cloud and Gemini metrics were improving.
- The analysts said free cash flow is now a key screen: Microsoft’s was strong, while Alphabet’s negative free cash flow worsened the stock reaction.
- A guest at Schwab said the advisory industry needs 70,000 more people over the next five years, before even counting attrition or AI effects.
- The Schwab executive argued AI will change advisory jobs, but soft skills, judgment and client trust will remain central.
- The guest said firms are already using AI in administrative operations and marketing, but not as much in the human relationship that drives trust.
Notable quotes
“first quarter adjusted earnings per share coming in above estimates at $4.89, first quarter revenue coming in above estimates at $92.28 billion”
“Google search, uh, Google services revenue that came in light 96.3 versus 98.4. The estimate on the street”
“Microsoft also said if you excluded OpenAI from that that RPO number is growing at a rate of 25%, excluding OpenAI”
“So search is still the golden goose. And from a scale perspective, like in the quarter, it's more than half of revenue”
“we need 70,000 more people to join the RA industry over the next five years to keep up with the growth we're experiencing right now”
How the episode opens
This is Bloomberg Businessweek daily reporting from the magazine that helps global leaders stay ahead with insight on the people, companies, and trends shaping today's complex economy, plus global business, finance and tech news as it happens. The Bloomberg Businessweek daily podcast with Carol Massar and Tim Stanback. We got to talk about Microsoft because the earnings coming out, stocks up about 2.5% here in the aftermarket first quarter adjusted earnings per share coming in above estimates at $4.89, first quarter revenue coming in above estimates at $92.28 billion.
First quarter Azure revenue excluding FX, up 48%. That beats estimates of 44.8%. First quarter revenue coming in at $92.28 billion, as I mentioned, another redhead crossing the Bloomberg terminal.
We're also seeing first quarter earnings per share, first quarter revenue, cloud revenue coming in above estimates at $63.9 billion. At this point, Carol, it's looking like a beat across the board, except for when it comes to CapEx, which came in lower. But I will go ahead and call that a bid.
All right. I'm going to go to alphabet because it's also crossing third quarter, uh, Google search and other revenue. Uh, that is coming in a little light, 63.35 billion.
The street estimate was 64.85 billion. Google search, uh, Google services revenue that came in light 96.3 versus 98.4. The estimate on the street.
Third quarter CapEx $51.36 billion. That's below the street estimate of $55.78 billion. I'm taking a look at Google shares.
Yeah, they are falling in the aftermarket. And if you pulled it up here, um, but I just, uh, it looks like it's taking quite a dive here. Um, down about 6% in the after hours.
Yeah. So we are actually seeing some disappointment in terms of some of the numbers, third quarter revenue, TAC uh, an important number here, a 111.21 billion, slightly light the street looking for 111.29 billion third quarter Google cloud revenue.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ai for financial advisors
- alphabet earnings
- microsoft earnings
- ria custodians
- wealth management technology
Companies and tickers mentioned
- GOOGL
- GOOG
- MSFT
- SCHW
- Alphabet
- Microsoft
- Charles Schwab
- Anthropic
Watch the episode
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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