Updated Nov. 7, 2025
Key takeaways
- Alphabet (Google) just posted its first-ever $100B quarter and raised 2025 capex guidance to $91–$93B, underscoring an aggressive AI and data center buildout. Google Cloud grew 34% year over year in Q3. s206.q4cdn.com
- Microsoft delivered 40% Azure growth in its September quarter (FY26 Q1) and returned $10.7B to shareholders in dividends and buybacks; dividend was lifted to $0.91 per share in September. Microsoft+1
- Regulation is reshaping both stories: a U.S. court’s remedies ruling spared Google a breakup in the search case; weeks later the EU fined Google €2.95B over ad-tech practices. The EU also accepted commitments from Microsoft to resolve Teams bundling concerns. Reuters+2European Commission+2
- YTD performance (context): After a strong run into late October, third‑party tallies show Alphabet up roughly ~45% YTD around the Q3 print, while Microsoft is up ~29–30% YTD heading into earnings week; both have dipped modestly since. (Methodology varies across sources and dates.) Investopedia+2Investopedia+2
2025 performance snapshot (through today)
Markets whipsawed after mega-cap earnings, but the scoreboard still shows Alphabet outpacing Microsoft for 2025 to date. Around Alphabet’s Oct. 29 report, multiple outlets pegged its YTD gain near ~45%, propelled by an AI-and-ads reacceleration and a clean beat. Microsoft’s ~29–30% YTD climb reflects continued Azure strength and enthusiasm around Copilot and OpenAI—tempered by capex scrutiny and post-earnings volatility. As of Nov. 7, both are off recent highs but remain standout performers among mega-cap tech. Investopedia+2Investopedia+2
Earnings roundup: who executed best?
Alphabet (calendar Q3 2025)
- Revenue:$102.3B, +16% YoY; EPS:$2.87, +35% YoY. All major businesses delivered double‑digit growth, including Search, YouTube, Subscriptions & Devices, and Cloud. s206.q4cdn.com
- Google Cloud:$15.2B, +34% YoY; backlog reached $155B. s206.q4cdn.com
- Capex: Guidance raised to $91–$93B for 2025, reflecting AI infrastructure buildout. s206.q4cdn.com
- Milestone: Alphabet crossed $3T market cap in mid‑September. Reuters
Microsoft (FY26 Q1, quarter ended Sept. 30, 2025)
- Revenue:$77.7B, +18% YoY; GAAP EPS:$3.72 (+13%), non‑GAAP EPS:$4.13 (+23%). Microsoft
- Azure & other cloud services:+40% YoY (39% cc)—still the engine. Microsoft Cloud revenue: $49.1B, +26%. Microsoft
- Capital returns:$10.7B to shareholders in the quarter; in September, the board raised the quarterly dividend to $0.91. Microsoft+1
Verdict: Alphabet’s quarter surprised across segments and set a revenue record, while Microsoft’s Azure growth remained formidable but drew investor questions about the scale and return of AI capex—a recurring theme in 2025. Reuters
The AI stack: Gemini vs. Copilot (and where cloud fits)
- Google’s AI
At I/O 2025, Google scaled AI Overviews and AI Mode in Search, and expanded Gemini capabilities across consumer and enterprise surfaces. Google Cloud also highlighted upgraded Gemini model families for developers and enterprises. Management says AI is now directly boosting Search, YouTube, and Cloud. s206.q4cdn.com+3blog.google+3Google Busine… - Microsoft’s AI
At Build 2025, Microsoft broadened Copilot Studio tools and rolled out Windows AI Foundry and local “inbox” models on Copilot+ PCs—tying endpoint NPUs to Azure AI. Phi small models and agentic capabilities push a hybrid edge‑to‑cloud approach, complementing Azure’s model roster. Source+2Windows Blog+2 - OpenAI partnership reset
In late October, Microsoft and OpenAI rewrote the partnership. OpenAI created a Public Benefit Corporation structure; Microsoft holds a significant minority stake (Reuters cites ~27%; OpenAI’s post describes ~32.5% on an as‑converted basis, excluding recent rounds) and retains privileged Azure alignment. Markets read it as tightening a core AI supply line for Microsoft. Reuters+1
Cloud scoreboard 2025:
Azure +40% in the September quarter; Google Cloud +34% in Alphabet’s Q3—both accelerating as AI workloads ramp. Alphabet’s Cloud backlog at $155B signals multiyear visibility; Microsoft’s RPO at $392B across commercial cloud also points to durable demand. Microsoft+1
Capex, margins, and cash returns
- Alphabet guided $91–$93B in 2025 capex to fund AI infrastructure (TPUs, data centers, networking). Despite heavy investment, Alphabet’s Q3 operating margin was 30.5% (or 33.9% excluding the EC fine). Alphabet pays a quarterly dividend of $0.21 (latest ex‑dates in Sept. and Dec.). s206.q4cdn.com+1
- Microsoft continues a sizable capex cycle tied to AI and Azure capacity while maintaining robust cash returns; it raised the dividend to $0.91 in September 2025 and routinely repurchases shares. Source
Investor translation: Both are in a “spend now, monetize over time” phase for AI. Alphabet’s reinvestment is unusually large (even for Alphabet), while Microsoft enjoys a more mature enterprise monetization path via Azure + Microsoft 365 Copilot.
Regulation watch: risks are real, but clarity improved in 2H25
- U.S. search case (DOJ v. Google): In September, Judge Amit Mehta imposed behavioral remedies (e.g., curbs on exclusive distribution contracts) but stopped short of a breakup. Markets cheered the relief valve on tail‑risk. Reuters
- EU ad‑tech case: On Sept. 5, the European Commission fined Google €2.95B over ad‑tech practices—cited explicitly in Alphabet’s Q3 release (booked as a $3.5B charge). Appeals are expected. European Commission+1
- Microsoft–Teams (EU): On Sept. 11, the Commission accepted commitments from Microsoft on Teams bundling and interoperability, closing a key front. European Commission
- UK cloud markets: The UK CMA’s final decision on cloud competition flagged Microsoft’s licensing as a barrier to rivals and signaled future Strategic Market Status actions under the DMCCA. Remedies may come via follow‑on designations in 2026. GOV.UK+1
Net effect: For Alphabet, U.S. relief + EU fine produce mixed headlines but clearer guardrails; for Microsoft, Teams commitments reduce one legal overhang while UK licensing scrutiny remains a watch item.
Valuation context (no hype, just numbers)
- Alphabet has recently traded near ~23x forward earnings, the lowest multiple among the Mag‑7 per LSEG/Reuters in September—before the late‑October surge and early‑November wobble. Reuters
- Microsoft typically commands a higher forward P/E (~low‑ to mid‑30s per multiple trackers and Yahoo Finance statistics), reflecting Azure growth and premium cash‑flow durability. Broad tech forward multiples remain elevated versus long‑term averages. Yahoo Finance+1
Catalysts to watch next
- Alphabet: AI Mode and AI Overviews monetization signals; Cloud backlog conversion; trajectory of the EU ad‑tech appeal; continued hardware and Android ecosystem tie‑ins. Google Business+1
- Microsoft: Azure demand vs. AI capex cadence; Copilot seat adoption and incremental ARPU; any further OpenAI partnership updates as the PBC structure beds in. Microsoft+1
Bottom line: which stock for which investor?
- Alphabet (GOOGL): Best suited for investors who want broader optionality across Ads, YouTube, and Cloud with a still‑lower forward multiple vs. peers—and who can tolerate regulatory noise and heavy (but purposeful) AI capex. Q3 shows AI is adding to Search, not cannibalizing it. s206.q4cdn.com
- Microsoft (MSFT): Best for investors who favor enterprise AI monetization now (Azure + Copilot), with recurring cloud revenue and dependable capital returns (dividend growth). The trade‑off is valuation premium and intense scrutiny on capex ROI. Microsoft+1
Our 2025 scoreboard (through Nov. 7): Alphabet leads on share performance and surprise factor this year; Microsoft leads on enterprise AI distribution and defensive cash‑flow quality. Both remain foundational AI platforms, but the risk‑reward skew differs: Alphabet for multiple expansion if AI keeps lifting Ads + Cloud, Microsoft for steadier compounding if Azure’s 40% growth sustains without capex backlash. s206.q4cdn.com+2Microsoft+2
Sources & further reading
- Alphabet Q3’25 results press release (PDF): revenue $102.3B; Cloud +34%; capex guide $91–$93B; EC fine impact. s206.q4cdn.com
- Microsoft FY26 Q1 press release: Azure +40%, Microsoft Cloud $49.1B (+26%), shareholder returns $10.7B. Microsoft
- Microsoft dividend increase to $0.91 (Sept. 15, 2025). Source
- Alphabet dividend history and upcoming ex‑dates. Stock Events
- DOJ v. Google (search) remedies outcome coverage; market reaction. Reuters
- EU fine against Google in ad‑tech (press corner). European Commission
- EU acceptance of Microsoft commitments on Teams. European Commission
- UK CMA cloud market final decision and Microsoft licensing focus. GOV.UK+1
- Alphabet hits $3T market cap. Reuters
- Microsoft–OpenAI partnership restructuring (stake details). Reuters+1
- Google I/O 2025 and Gemini/AI Overviews updates. blog.google+1
- Microsoft Build 2025 (Copilot Studio, Windows AI Foundry, edge‑to‑cloud AI). Source+1
Disclosure: This article is for information and news analysis, not investment advice. Always do your own research and consider consulting a licensed financial advisor.
