Investors reward cash flow as AI spending battle lines shift

Wall Street rewarded Microsoft and Oracle for funding AI expansion through cash flow, while punishing Alphabet for heavy spending, with Alphabet shares plunging nearly 11 percent and Microsoft rising over two percent in premarket trading. Microsoft generated $18.6 billion in free cash flow in its fiscal first quarter, beating expectations by nearly $10 billion, while Azure cloud revenue surged 48 percent. Alphabet spent 121.4 percent of operating cash flow on capital expenditures, and Google Search revenue growth slowed to 12 percent, below forecasts. Oracle shares rose nearly 11 percent after planning to cap external financing and turn cash flow positive by fiscal 2028. Meta’s cash burn last week also drew investor concern, highlighting a broader shift toward demanding financial discipline in AI spending.