Can the AI rally keep going? I care more about these three signals than capex figures

Microsoft and Google’s earnings reports tell the market a hard truth: the AI story is still unfolding, but investors are no longer satisfied with just hearing the story.
Azure grew 48%, and Google Cloud grew 103%, showing that demand for AI computing power and cloud services remains strong. But Microsoft’s free cash flow reached $18.6 billion, while Google’s was negative $9.1 billion. Both are investing in AI, yet the market’s assessment of them is very different.
So, when judging the AI rally from here, I care most about three signals.
First, whether business growth can be sustained. AI can’t rely on product launches to generate buzz; it also needs to become part of real enterprise workflows.
Second, whether capital expenditure can translate into revenue. Data centers aren’t just for show, and GPUs can’t just generate heat—they have to create business value.
Third, whether free cash flow and profit margins can improve. Companies can invest boldly, but they can’t rely forever on talking about the future to justify today’s bills.
I remain optimistic about AI’s long-term prospects. Technological revolutions never happen overnight; the internet and cloud computing both went through phases where investment came first and profits followed.
So the AI rally isn’t simply ending or continuing—it’s entering a new phase of survival of the fittest. The future is promising, but investing also requires good timing. After all, it’s romantic to say technology can change the world, but when it comes to making money, earnings reports have to be grounded in reality!
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