Alphabet and Tesla’s Q2 Earnings: AI Spending Concerns Cause Wall Street Stir
Investors were left reeling this week as tech behemoths, Alphabet (Google’s parent company) and Tesla, unveiled their Q2 2026 earnings. Despite surpassing key revenue benchmarks, the companies’ projected AI capital expenditure sparked concerns, leading to a significant selloff.
Alphabet announced a revenue of $119.8 billion, exceeding analyst expectations of $117.0 billion, and an EPS of $2.26, slightly above the consensus of $2.24. However, the company’s projected capital expenditure for 2026, ranging from $195 billion to $205 billion, sent shockwaves through Wall Street. This staggering figure led to a 3% drop in Alphabet shares after hours, followed by a 7% decline during Thursday’s trading session.
Meanwhile, Tesla reported a revenue of $28.2 billion, falling just short of the $28.3 billion consensus. The company’s adjusted EPS of $0.33 slightly outperformed forecasts. Tesla also confirmed the installation of the first Optimus humanoid robot production lines at Gigafactory Texas, with production expected to commence later in 2026. This news, however, did not prevent Tesla shares from plummeting 14% on Thursday.
Both companies reported negative free cash flow for the quarter, leading investors to demand tangible evidence that the substantial AI spending will yield profitable growth.
Source: CNBC – Alphabet and Tesla test Wall Street’s patience as AI spending overshadows growth