What to watch as Microsoft and Alphabet report earnings

Just before I dig into the individual numbers, I want to I want to pull out a fun stat because only two fun only two of the mag seven stocks this year have outperformed the S&P 500, Nvidia and Apple. And the common denominator between the two of them is that they're both free cash flow positive. The next behind them, which is pretty much in line with the S&P, is Microsoft also free cash flow positive. The underperformers, Meta and Amazon, for example, are both free cash flow negative. And what that's saying now is the market is rewarding uh focus on on free cash flow on a bit more profitability and outlook and and reigned in spending right this is not what we're hearing from the likes of Alphabet and Microsoft which have upped their spending guidance already this year and I think the market expecting something like mid- teens growth in search uh so not huge growth versus what Google has seen prior but if it can offset that with growth it's seeing in this area around its TPUs, its custom chips. That could be very interesting. In the last 24 hours, it announced a deal where effectively Oracle is going to be selling compute using uh Google's TPUs. The first hyperscaler to do so. This is a brand new area for Google. Usually companies that are developing custom chips. We've seen it with Amazon. We've seen it with Microsoft and Google keep those inhouse and sell the compute via their cloud services. Now, what Google is saying is, well, we've got these great chips. people want to use them but they might not necessarily want to use Google cloud but we can still make revenue by putting those chips in other people's data centers and selling them through other hyperscalers that's a very interesting business I think if that sees promising growth and there is continued demand for that that can help offset some of the concerns around the core search business which of course is still its profit driver and maybe give a little bit of hope to investors that actually there is an emerging business here for Google in the info realm