Key facts
- Alphabet reported revenue of $119.8bn, exceeding expectations, with Google Cloud revenue up 82%.
- Alphabet increased its capital expenditure forecast to $195bn-$205bn for AI infrastructure.
- Tesla plans to spend over $25bn this year on AI and robotics, including robotaxis and the Optimus robot.
- Tesla's capital expenditure jumped 142% year-on-year, leading to negative free cash flow for the quarter.
- Alphabet's Gemini app reached 950 million monthly active users.
Alphabet and Tesla, two prominent technology companies, reported strong earnings that were overshadowed by significant planned investments in artificial intelligence infrastructure, leading to declines in their share prices. Alphabet, Google's parent company, announced revenue of $119.8 billion, surpassing expectations, with Google Cloud revenue surging 82%. The company revised its full-year capital expenditure forecast upwards to between $195 billion and $205 billion, citing strong demand and supply constraints for AI capacity. Alphabet's Gemini app has reached 950 million monthly active users.
Analysts noted the impressive results but highlighted the substantial capital expenditure increase as a consequence of the capital-intensive AI race. Tesla reaffirmed its intention to invest over $25 billion this year in AI infrastructure, robotaxis, and its Optimus humanoid robot program. This aggressive spending, coupled with a 142% year-on-year increase in capital expenditure, led to negative free cash flow for the quarter. CEO Elon Musk defended the investment, emphasizing the need to expand manufacturing rapidly for next-generation AI products.
Market strategists characterized Alphabet as showing early returns from AI investments, while Tesla requires more investor patience. The market's focus on escalating AI spending overshadowed Alphabet's cloud growth, a concern expected to be monitored in upcoming earnings reports from other major tech firms.