Today, ahead of the doubleheader of Mag 7 reports when both Microsoft and Google parent Alphabet report, we wrote in our preview that Microsoft has become the consensus long, while Alphabet "still feels like the consensus funding short across megacaps." And both have to convince a market that, as Goldman's Rich Privorotsky put it this morning, now has "eye watering expectations":
"These really matter. Eye watering expectations… buyside probably closer to Azure growth around high 40s%, Google Cloud around mid 90s%. The question isn't whether those are good numbers, but whether they can surpass already high expectations... Azure probably needs a guidance raise to be properly supportive. The nuance is capacity… if they miss elevated expectations simply because they cannot bring enough compute online. That's disappointing for near term revenue but potentially even more bullish for the scarcity premium and future spending. Watch customer concentration, how broad the demand really is and, crucially, the relationship between revenue growth, capex and margins. The market wants evidence that the incremental economics work."
In other words, a cloud beat is just the price of admission, and the debate tonight is what all that cloud costs, and who pays for it.
Within the Mag 7, Microsoft and Alphabet sit at opposite ends. Goldman's derivatives desk has Microsoft at 8/10 on its positioning score (the same score Meta carried into its print last week, and we all know how that went). Alphabet, meanwhile, keeps ge
