Shares of Microsoft (MSFT) and Google (GOOG) saw a sharp selloff Wednesday as the two tech giants failed to please Wall Street bulls.

Both companies saw declines continue into the next trading session. As of Thursday at 3:19 p.m. ET, shares of Alphabet were trading at $92.59, down $2.23, or 2.35%. Shares of Microsoft were trading at $226.64, down $4.68, or 2.02%.

Microsoft beat top and bottom-line estimates, but its fast-growing intelligent Cloud segment lagged behind expectations. Google missed both top and bottom-line estimates as advertising revenues slowed down.

But there's a financial metric Wall Street is missing. Both companies are creating ever more value for capital holders.

Microsoft

Microsoft had a decent first quarter for the fiscal year which ended on Sept. 30 given the challenging environment the technology sector has been in recent months. The tech giant beat analysts' estimates on both the top and the bottom lines.

"In a world facing increasing headwinds, digital technology is the ultimate tailwind," said Satya Nadella, Microsoft's chairman and chief executive officer. "In this environment, we're focused on helping our customers do more with less, while investing in secular growth areas and managing our cost structure in a disciplined way."

But the number investors were looking for wasn't just the top and bottom-line numbers. Instead, it was the intelligent Cloud business segment growth that has helped the technology leader rise again on Wall Street.

"This quarter Microsoft Cloud revenue was $25.7 billion, up 24% (up 31% in constant currency) year-over-year. We continue to see healthy demand across our commercial businesses including another quarter of solid bookings as we deliver compelling value for customers," said Amy Hood, the company's executive vice president and chief financial officer.

That sounds impressive, but it missed analysts' expectations.

"While the segment's revenues jumped 20% year over year to $20.33 billion, it failed to match the $20.36 billion that analysts expected," said Anthony Denier, CEO of Webull, a commission-free trading platform.

"Azure saw revenue grow 35% in the quarter, but analysts were looking for 36.4%. That is why the stock is falling."

Still, there's one financial metric, not included in this report, Economic Profit or Economic Value Added (EVA), which measures how effectively management allocates capital.

A positive EVA shows that the management is effective in managing capital, creating value for capital holders in excess of the market.

According to GuruFocus, Microsoft's EVA is positive and rising, from 2% in 2016 to 21% currently, meaning that the company creates more value for its capital holders today than six years ago.

Alphabet

Alphabet had a reasonable third quarter for the fiscal year 2002. Revenues came out to $69.1 billion, short of the $71 billion analysts expected, and so did the EPS of $1.06 -- well below the analysts' estimates of $1.27.

Denier points to a decline in advertising spending for the shortfall.

"The implications for the tech sector are that the macroclimate is challenging, which could be a sign that the economy is slowing," Denier said.

Management didn't talk much about the challenging environment for the tech sector and the slowing economy. Instead, it tried to direct investor attention to the future rather than the past.

"We're sharpening our focus on a clear product and business priorities. Product announcements we've made in the past month alone have shown that very clearly, including significant improvements to both Search and Cloud, powered by AI, and new ways to monetize YouTube Shorts," said CEO Sundar Pichai.

New product development is a critical variable in the calculation of the company's Economic Value Added, which currently stands at 27.5%, meaning that Google's management allocates capital effectively, delivering superior returns to capital holders.

Panos Mourdoukoutas is an economist and professor and chair of the Department of Economics at LIU Post in New York. He owns shares in Microsoft and Alphabet.

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