A drop of more than 12% hit Alphabet after heavy infrastructure spending drove another quarter of negative free cash flow. Oracle rose 10.7% on accelerating enterprise cloud demand. Investing.com reads the split as investors demanding returns on capital spending.
Alphabet shares tumbled 12.29% on Thursday as data center commitments collided with margin scrutiny. Oracle, by contrast, rallied 10.7% as enterprise demand accelerated across its cloud business.
Alphabet lifts capex guidance to $195 billion–$205 billion
Alphabet's revenue expanded to $127.58 billion, but diluted earnings fell to $2.12 per share. Quarterly investing outlays climbed to $71.35 billion against $42.29 billion in operating cash flow, deepening its free cash flow deficit. Management also raised its full-year capital expenditure guidance to between $195 billion and $205 billion.
Still, Google Cloud backlog stands at $514 billion. The Gemini app has surpassed 950 million active users.
Investing.com says the market is no longer giving hyperscalers a blank check. It points to hardware depreciation, a 3.6-gigawatt nuclear supply agreement with Constellation Energy and a federal antitrust monitor overseeing its ad-tech stack as pressures on near-term margins.
Oracle's cloud revenue surges 121%
Oracle gained 10.7% to $144.54 after posting record quarterly revenue of $19.35 billion, up 30% year-over-year. Non-GAAP earnings of $1.92 per share beat consensus estimates by 11%.
The main driver was Oracle Cloud Infrastructure, with revenue surging 121% to $7.4 billion. The company delivered 850 megawatts of capacity and over 300,000 GPUs in the quarter, reaching 97.9% GPU utilization. It also closed over $30 billion in new AI contracts without requiring additional Oracle capital, funded through customer prepayments, supplier financing and bring-your-own-hardware arrangements.
Balance-sheet risk remains. Oracle's full-year capital expenditure guidance of $90 billion to $95 billion contributed to negative free cash flow of $5 billion in its first quarter.
Source: Investing.com
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