Why Tesla and Alphabet Stocks Dropped After Betting Bigger on AI?
Alphabet said AI infrastructure spending will rise to $205 billion in 2026 as investors questioned whether paper gains can sustain growth.
- On Thursday, Alphabet shares plunged 6.89 percent in New York after the company reported its first-ever negative free cash flow as a public firm, despite posting a record quarterly profit of $112 billion.
- Paper gains fueled the profit headline, with $99 billion coming from investment portfolio stakes in Elon Musk's SpaceX and Anthropic rather than core advertising or cloud services revenue.
- Alphabet raised its 2026 capital expenditure forecast to between $195 billion and $205 billion, as chief executive Sundar Pichai insisted the firm must spend aggressively on computing infrastructure to break capacity bottlenecks.
- Anat Ashkenazi, Alphabet's new chief financial officer, warned investors that capital spending is expected to "increase significantly in 2027," signaling further pressure on cash generation.
- Investors, who previously overlooked heavy AI spending last year, now demand clearer proof that investments will generate stable, cash-backed returns rather than volatile balance-sheet gains tied to the broader AI trade.
13 Articles
13 Articles
Why Tesla and Alphabet Stocks Dropped After Betting Bigger on AI?
Revenue came in ahead of forecasts for both Tesla and Alphabet in Q2 2026. Their stocks sold off anyway. Alphabet pushed its AI spending forecast up to $205 billion at the high end. Tesla’s own capex jumped 142%, flipping free cash flow negative for the first time in two years. Here’s what actually spooked investors, and why bigger AI budgets no longer guarantee a bigger stock price. The AI Invoice Comes Due Tesla and Alphabet both beat Wall Str…
Alphabet Stocks Plunge: Google Posts Negative Cash Flow for First Time in Public Firm History
Google shares plunged in New York on Thursday after parent company Alphabet reported its first-ever negative free cash flow as a public firm, despite posting a record quarterly profit of $112 billion fuelled largely by paper gains on its investments in other tech and AI companies. The shock figures, released in Alphabet's latest earnings report, have sharpened questions over how much of Google's AI boom is built on solid ground and how much is r…
Alphabet Stocks Plunge: Is Google's AI boom riding on a frothy market that could deflate
Alphabet's latest earnings show Google posting a record $112 billion profit, largely from AI-linked investments, even as it reports negative free cash flow for the first time in its public history.
With "AI trading" having driven the market through the crisis of the outbreak of the Iran War, there are many pessimistic views that the bubble is finally about to burst. However, Joe Cioli, Executive Editor of the US editorial department, presented a completely different perspective in the US newsletter, so let's take a look at what he has to say.
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