Google and Microsoft Just Proved the AI Trade Is Alive—While OpenAI Is Sweating

Wednesday was a bad day to be an AI doomer.

Microsoft and Alphabet, Google’s parent company, both reported profits after the bell, and both crushed expectations — on the same day, OpenAI’s revenue declines were still reverberating through the market. The message from the two biggest players in enterprise cloud was hard to miss: the AI ​​business isn’t slowing down. If anything, it’s speeding up.

Alphabet placed $109.9 billion in the first quarter of 2026, revenue rose 22% from a year ago and the company’s fastest growth rate since 2022. Wall Street expected about $107.1 billion. The headline figure is Google Cloud, which raised $20.03 billion – up 63% year over year from $12.26 billion in the first quarter of 2025, and nearly $1.6 billion more than analyst estimates. CEO Sundar Pichai said enterprise AI solutions had become “our top cloud growth driver for the first time in the first quarter.”

Microsoft wasn’t far behind. The company reported $82.9 billion in revenue for the third quarter of 2026, up 18% year over year, beating estimates of $81.39 billion. The real number that grabbed attention: its AI business surpassed $37 billion in annual revenue, up 123% from the previous year. Azure and other cloud services grew 40% year over year. Microsoft Cloud reached a total of $54.5 billion, up 29%.

All this thanks to the magic of the AI ​​tree.

Copilot, now Microsoft’s AI assistant for enterprises exceeds 20 million paying users, compared to 15 million last quarter. CEO Satya Nadella called it the “agentic computing era,” a phrase you say when your numbers back it up.

Gemini pulls its weight across the board. Earlier this year, Apple signed a multi-year deal to build the next generation of Foundation Models on Google’s Gemini, handing the search giant one of the biggest AI endorsements of 2026. Gemini Enterprise’s paid monthly active users grew 40% quarter-over-quarter. Google’s Cloud backlog has been hit $460 billion– almost double the previous quarter.

All of this takes place against the backdrop of OpenAI’s bad week. The company missed its own internal targets for both revenue and user growth, with CFO Sarah Friar reportedly telling company executives that she was concerned that OpenAI might not be able to fund future computing contracts if revenue did not grow quickly enough.

The market response was swift. CNBC reports that Oracle was down about 4%, CoreWeave was down more than 5%, and SoftBank — one of OpenAI’s largest investors — was down about 10% during trading hours in Tokyo. Nvidia and AMD also fell.

The contrast is hard to ignore. While OpenAI leans on investors to bridge the gap between ambition and revenue, Google and Microsoft are printing money from the same AI wave. Released in November 2025, Gemini 3 Pro surpassed its predecessor on every benchmark Google tested and is now driving commercial demand in the cloud.

On the advertising side, Google’s total advertising revenue came to $77.25 billionan increase of 15.5% year-on-year, which also beats estimates in that area. YouTube was the only weak point at $9.88 billion compared to the forecast of $9.99 billion – a small miss in an otherwise good appearance.

Alphabet forecast 2026 capital expenditures at $175 billion to $185 billion, up from $91.4 billion in 2025. The $460 billion cloud backlog could indicate the company expects these bets to continue converting into revenue well into 2027.