Tesla, Alphabet Shed $500 Billion as AI Spending Plans Trigger 14.5% and 7.1% Stock Drops
Updated
Updated · CNBC · Jul 23
Tesla, Alphabet Shed $500 Billion as AI Spending Plans Trigger 14.5% and 7.1% Stock Drops
3 articles · Updated · CNBC · Jul 23
Summary
Tesla lost about $200 billion in market value and Alphabet about $300 billion on Thursday after both companies flagged heavier AI-related spending and posted negative second-quarter free cash flow.
Alphabet lifted its annual capital spending forecast to $195 billion-$205 billion from $180 billion-$190 billion, while Tesla said Q2 capex jumped 142% to $5.79 billion and should top $25 billion this year.
Management argued the outlays are tied to growth—Alphabet said it is accelerating capacity to meet AI demand, and Tesla pointed to semiconductor work and first-generation Optimus production lines.
Investors still focused on cost pressure and execution risk, with analysts citing Alphabet's weaker margin outlook, Gemini 3.5 Pro delays and limited standout AI product releases.
Some operating results were stronger: Google Cloud revenue rose 82% to $24.8 billion with margin expanding to 35.6%, while Tesla's automotive revenue increased 23% to $20.52 billion.
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Overview
In July 2026, Tesla chose to prioritize long-term growth by investing heavily in advanced technologies like autonomy, robotics, and AI, even though this meant sacrificing near-term profitability and straining its free cash flow due to rising operating costs and external pressures like commodity prices and interest rates. Meanwhile, Alphabet reported strong revenue and profit growth, driven by its booming cloud and AI businesses, but faced a muted stock market reaction as investors wanted even more aggressive capital spending on AI infrastructure. Both companies’ strategies highlight the intense competition and massive investments shaping the future of the tech industry.