Quick Read
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Alphabet spent $9 billion more than it earned in Q3, covering the gap with $41 billion raised from share sales and new debt.
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The five tech giants slashed buybacks 83% to $14 billion, returning just 9% of operating cash flow to shareholders, the lowest rate in 15 years.
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Through the first nine months of 2026, Microsoft( NASDAQ:MSFT ), Alphabet( NASDAQ:GOOG , NASDAQ:GOOGL ), Amazon( NASDAQ:AMZN ), Meta Platforms( NASDAQ:META ) and Oracle( NYSE:ORCL ) together spent $556.9 billion on capital projects, mostly AI data centers. Their combined operating cash flow, which is the cash a business brings in from customers after paying its bills, reached a record $542.9 billion.
Capital spending had never topped operating cash flow in data going back to 2011. Free cash flow, meaning the cash left after capital spending, shifted to a $14 billion deficit from a $143.5 billion surplus a year earlier.
The selling continued on October 30, 2026. Microsoft fell 1.55% to $521.91, worth $3.875 trillion. Alphabet slipped 1.4% to $279.84, worth $3.471 trillion, and has lost 12.61% over the past week.
Buybacks Have Nearly Vanished From Big Tech
The five returned just 9.3% of operating cash flow as dividends and buybacks, down from 27.4%. That is the smallest share in at least 15 years.
Buybacks fell 83% to $13.6 billion from $81.8 billion, while dividends rose to $37 billion from $33.9 billion. The $50.6 billion in payouts effectively came out of cash reserves, borrowing, or share sales.
This matters because buybacks shrink the share count, which lifts earnings per share even when profit stays flat. When buybacks stop and the company sells new shares, each share you own gets a smaller slice of the same profit.
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Alphabet Has Already Crossed the Line
Alphabet's third-quarter capital spending of $51.355 billion exceeded operating cash flow of $42.290 billion, which left free cash flow at negative $9.065 billion. Its second quarter was also negative.
Alphabet has not bought back a share in 2026. It raised about $12.4 billion from share sales and $29 billion from debt.
The spending is producing results, because Google Cloud revenue grew 103% to $30.709 billion. EPS still came in at $2.12, missing expectations of $2.9659 after an $8.7 billion loss on equity securities.
Microsoft Still Pays for Its Build From Operations
Microsoft's capital spending more than doubled to $39.367 billion from a year earlier. Operating cash flow of $58 billion still covered it, leaving free cash flow of $18.6 billion.
Microsoft still cut buybacks to $4.4 billion from $5.7 billion. On October 29, 2026, it priced $25 billion of bonds, its first U.S. dollar bond sale since 2017.
Management expects second-quarter capital spending of over $50 billion, so that buffer is getting smaller. However, its commercial remaining performance obligation, which is contracted revenue it has not yet booked, stands at $677 billion.
Investors Split on Whether Cash Flow Matters
Mark Schilsky, a technology specialist at JPMorgan, said investors care "so much more about EPS than FCF." Ehren Stanhope of Franklin Templeton warned of "greater equity and debt issuance, a request of capital from investors."
Alphabet is already doing what Stanhope described. Forward AI data-center commitments across the five total more than $3 trillion, including more than $1 trillion at Alphabet, so the gap will likely get wider before it starts to close. Riding an expansion this large is fine as long as you have an exit plan, which is the whole subject of our free bubble survivor's handbook.
Can Big Tech Keep Funding Its AI Buildout?
The bull case is that demand is still outpacing supply. Azure grew 48%, and Microsoft expects 49% to 50% in constant currency next quarter. The bear case is that higher borrowing costs, or investors running out of patience, would hit shareholders who are now funding the build through dilution.
My view is that Microsoft is in a stronger financial position than Alphabet. Its shares trade at a higher valuation than Alphabet's, but Microsoft funds its expansion from operations, while Alphabet sells shares to fund its own.
Each company's next earnings report will test this view. If Microsoft spends more than $50 billion and stays free cash flow positive, this view holds. A third straight quarter of negative free cash flow at Alphabet would confirm that its shareholders are carrying the cost.
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