What's going on?

Investors gave Alphabet�s results an initial A+ on Tuesday, while Microsoft got more of a middling B grade.

What does this mean?

Microsoft�s stock has rocketed nearly 50% this year, so it�s safe to say the firm was facing some pretty lofty expectations on Tuesday. But the results, while decent-ish, didn�t exactly set the world on fire � leading to a pretty low-key initial reaction. Mind you, Microsoft did manage to clock up better-than-expected revenue growth of 10% compared to the same quarter last year, and profit also outdid forecasts, jumping 20%. Plus, the company�s crucial cloud business, Azure, grew 26% � slightly ahead of expectations, but still slower than the quarter before.

Meanwhile, Alphabet�s results were met with a standing ovation. The stars of that show were YouTube, which was back in growth mode, and Google�s own cloud business � which posted impressive growth of 28%.

Why should I care?

For markets: Azure-sky thinking.
Microsoft�s main game plan involves selling its AI-boosted software, Copilot, now with a shiny new price tag of an extra $30 per user. But some fireworks might also happen in Microsoft�s cloud business, Azure. As firms start letting AI loose, they�ll need more computing power, and that�s Azure�s cue to step in. And sure, this past quarter�s 26% growth isn�t exactly crawling � but investors will be hoping for a return to the glory days when Azure used to sprint at a pace of 35% plus.

Zooming out: Taking the temperature.
Google�s advertising revenue is a bit of a barometer for the economy. See, advertising�s a cyclical business, meaning firms splurge and starve their ad spending depending on the broader state of affairs. So with Google�s ad revenue growing again after a couple of tricky quarters � thanks in no small part to YouTube � maybe pundits will consider calling time on the US economic slowdown.