In a dramatic twist, Tesla and Alphabet stocks nosedived post-earnings, losing billions in market value. Investors are jittery about the hefty AI spending both companies are diving into. Tesla's shares plummeted by 14.5%, while Alphabet took a 7.1% hit. The electric vehicle giant saw $200 billion vanish from its market cap, and Alphabet wasn't far behind, losing $300 billion.
Both companies reported negative free cash flow for the second quarter, with Alphabet upping its capital expenditure forecast to a whopping $195 billion to $205 billion. Tesla's spending also surged, with a 142% year-on-year increase in capex.
Amazon wasn't spared either, tumbling 4.6% and shedding $120 billion in market value. Despite the financial frenzy, management at Tesla and Alphabet reassured investors about their spending spree. Elon Musk highlighted Tesla's ventures into semiconductor production and the upcoming Optimus humanoid robot.
Alphabet's CFO explained the spending spike as a response to soaring demand, with Google Cloud's revenue jumping 82% to $24.8 billion, a silver lining in the cloud of concerns. Alison Porter from Janus Henderson noted this as a positive sign for AI investments.
Meanwhile, Tesla's automotive business revved up with a 23% revenue increase. Despite the market jitters, the tech giants are banking on their AI investments to drive future growth.
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