Microsoft, Alphabet and Amazon spent $167.98B on AI infrastructure in Q3

Microsoft, Alphabet and Amazon reported third-quarter results in which the three companies together spent 167.98 billion dollars on purchases of property and equipment between July and September, according to techm.kr.

Amazon accounted for the largest share at 77.259 billion dollars, followed by Alphabet at 51.355 billion dollars and Microsoft at 39.367 billion dollars.

Only Microsoft was left with positive free cash flow after capital expenditure. Its operating cash flow for the quarter was 58.0 billion dollars, leaving 18.633 billion dollars after capital spending, equal to 68% of operating cash flow.

Alphabet's operating cash flow was 42.29 billion dollars and Amazon's 42.422 billion dollars, both below their capital expenditure. Alphabet showed a deficit of 9.065 billion dollars and Amazon a deficit of 34.837 billion dollars, with capital expenditure at 121% and 182% of operating cash flow respectively.

Cloud units grow

Cloud revenue rose across all three. Amazon Web Services posted 45.984 billion dollars, up 39.3% year on year and its highest growth rate in five years. Microsoft Azure revenue was 33.165 billion dollars, up 48%, and Google Cloud revenue was 30.709 billion dollars, up 103%.

Investors nonetheless sold the stocks. Alphabet shares fell 12.6% on the 29th as revenue and search advertising growth missed market expectations, while Amazon fell 4.25% in regular trading and around 6% after hours after revenue and EPS missed forecasts. Amazon said it will keep 2026 capital expenditure at 220 billion dollars and raise investment the following year, and Microsoft expects capital expenditure above 50 billion dollars next quarter.

In July, Alphabet paid a 5.2 billion dollar EU antitrust fine, with interest, related to Android; the penalty was imposed in 2018. Its operating cash flow was also affected by inventory build-up for sales of its TPU systems. The company plans to invest 195–205 billion dollars this year.