The Morning Brew Daily team spent a recent segment chewing on a simple question: if Google Search really faces a “nearly monopoly-like market share” ceiling, how is the segment still growing nearly 20% a year? Alphabet (NASDAQ:GOOGL | GOOGL Price Prediction) answered that one decisively this week, while Microsoft (NASDAQ:MSFT) gave investors something far less comfortable to sit with.
The Morning Brew hosts noted that four Magnificent Seven names reporting this week collectively represent over 15% of the S&P 500’s market cap, so the divergence matters for almost any retirement portfolio with index exposure.
Alphabet: Firing on Every Cylinder
Alphabet posted Q1 2026 revenue of $109.896 billion, up 22%, with profit up 81%. The headline line item was Google Search & Other revenue of $60.399 billion, up 19%, the figure that demolishes the “ChatGPT will kill Google” thesis investors have been trading on for two years.
CEO Sundar Pichai said AI is “lighting up every part of this business”, pointing to queries at an all time high and Gemini now processing more than 16 billion tokens per minute via direct API use. You can read the full 8-K exhibit on the SEC site.
Cloud is the other story. Google Cloud revenue grew 63% year-over-year, and backlog jumped from $240 billion last quarter to $460 billion. Alphabet expects to spend around $185 billion this year on AI infrastructure, much of it routed through its own Tensor Processing Units that compete with NVIDIA. The company also holds a 14% stake in Anthropic, which is now seeking a $900 billion valuation.
Shares rose 6% after hours and kept going. The stock closed Wednesday at $349.94 and traded at $377.11 Thursday, putting it up 119.25% over one year.
Microsoft: The Copilot Problem
Microsoft’s quarter was technically fine. EPS of $4.27 beat by 4.9% and Nadella flagged an AI business at a $37 billion annual run rate, up 123%. The market wanted more. Azure cloud growth of 39% disappointed investors, and the segment producer shared a caller’s line that Copilot is “the PT Cruiser of AI. Nobody asked for it. Yet somehow it’s everywhere.”
The kicker: only 3% of Microsoft’s corporate users are paying for Copilot, and the segment characterized this as Microsoft’s worst quarter since 2008. Layered on top, OpenAI and especially Anthropic are releasing software tools that will allow companies to basically create their own Excel and PowerPoint. That threatens the Office moat itself.
Microsoft fell 5.54% Thursday to $400.94, leaving it down 12.03% year to date. For retirement-focused investors weighing Mag 7 exposure, the read-through is straightforward: Alphabet keeps delivering Microsoft-tier cloud growth, and the alleged search ceiling keeps climbing.
I’d expect Google to keep on winning as it has always had a strong in-house AI team. Microsoft bet all its eggs on OpenAI early on and it does not have much to show to investors who care about AI except Co-Pilot. Unfortunately, that’s not something many Microsoft customers are excited about. If anything, many of its customers are annoyed by Microsoft trying to push AI onto them as they desperately try to bump up AI user numbers.
On the other hand, Alphabet is gaining AI users organically and is well-positioned to both compete with AI startups and while benefiting from them at the same time with its stakes in them.
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