AI trade stays alive as Google Cloud and Microsoft AI beat results; OpenAI misses targets

Google and Microsoft’s latest earnings support the “AI trade” rather than undermining it. On Apr 29, 2026, both companies reported after the bell while OpenAI’s recent revenue and user shortfalls were still weighing on sentiment. Alphabet posted Q1 revenue of $109.9 billion and its fastest growth since 2022. Most importantly for traders watching the AI trade, Google Cloud delivered $20.03 billion in Q1 2026 revenue—up 63% year over year—and about $1.6 billion above analyst estimates. CEO Sundar Pichai said enterprise AI solutions became the primary cloud growth driver for the first time. Microsoft also beat expectations, with $82.9 billion in fiscal Q3 revenue (+18% YoY). Its AI business climbed to an annual revenue run rate above $37 billion (+123% YoY). Azure and other cloud services grew 40% YoY, and Microsoft Cloud revenue reached $54.5 billion (+29%). Copilot now has over 20 million paid users. In contrast, OpenAI reportedly missed internal revenue and user targets. CFO Sarah Friar warned the company may struggle to fund future compute contracts if revenue does not improve. The market reaction highlighted the divergence: some AI infrastructure and investor-linked names reportedly fell, while Google and Microsoft momentum strengthened expectations for continued AI spending. The “AI trade” narrative looks intact as cloud backlog and capex plans remain aggressive.