Alphabet and Tesla shares tumble as AI spending spikes
Alphabet (Google) saw its shares drop nearly 7% after reporting a negative free cash flow of $5.9 billion for the second quarter, the first such loss since its 2004 IPO. The company disclosed $45 billion of AI‑related spending in the quarter, with about 60 % directed to servers and the rest to data centres, and said it expects total AI investment this year to reach up to $205 billion, $15 billion more than three months earlier.
Tesla’s stock fell 14.5% on the same day after the automaker posted a $1.1 billion negative free cash flow for the quarter, the first decline in two years. Tesla outlined plans to invest up to $25 billion this year, more than double its 2025 target, as part of a broader capital‑intensive cycle.
The surge in AI spending is also straining corporate bond markets, pushing risk premiums higher as investors reassess valuations of big‑tech issuers. At the same time, short sellers have increased activity, with short interest now at roughly 3.79 % of the S&P 500 float and 6.3 % of the Russell 3000, signalling growing scepticism about the sustainability of current AI‑driven price gains.
Analysts warn that the massive outlays may not translate into commensurate earnings for years, and the market is watching closely to see when, if ever, the AI investments generate the expected returns.
Entities: Alphabet Inc. · Anat Ashkenazi · Sundar Pichai · Tesla Inc. · Tesla, Inc. · Vaibhav Taneja
Claims
What the coverage asserts, and how well corroborated each claim is across sources.
- [○ 1 SOURCE] Alphabet reported Q2 free cash flow of –$5.9 billion, its first negative result since its 2004 IPO. (Article bdc36fa6‑3e11‑4263‑8a0d‑6f47d36d1204)
- [○ 1 SOURCE] Tesla intends to invest up to $25 billion in AI‑related projects this year, more than double its 2025 target. (Article bdc36fa6‑3e11‑4263‑8a0d‑6f47d36d1204)
- [○ 1 SOURCE] Corporate bond risk premiums have risen as Big Tech funds AI expansion with debt. (Article a94f33d9‑ba3d‑4e9e‑9e3a‑dc5d37030b35)
- [○ 1 SOURCE] Alphabet plans to spend up to $205 billion on AI in 2026, including $45 billion in Q2. (Article bdc36fa6‑3e11‑4263‑8a0d‑6f47d36d1204)
- [○ 1 SOURCE] Alphabet’s share price fell nearly 7% on Thursday. (Article bdc36fa6‑3e11‑4263‑8a0d‑6f47d36d1204)
- [○ 1 SOURCE] Short interest on U.S. stocks rose to about 3.79% of the S&P 500 float and 6.3% of the Russell 3000. (Article a40edee8‑12fa‑4a4e‑9ea0‑c98ca8aa54de)
- [○ 1 SOURCE] Tesla reported Q2 free cash flow of –$1.1 billion, its first negative result in two years. (Article bdc36fa6‑3e11‑4263‑8a0d‑6f47d36d1204)
- [○ 1 SOURCE] Tesla’s share price dropped about 14.5% after the earnings release. (Article bdc36fa6‑3e11‑4263‑8a0d‑6f47d36d1204)
- [○ 1 SOURCE] Tesla plans to invest up to $25 billion this year, more than double its 2025 target. (bdc36fa6-3e11-4263-8a0d-6f47d36d1204)
- [○ 1 SOURCE] Tesla reported a negative free cash flow of $1.1 billion for Q2, its first decline in two years. (bdc36fa6-3e11-4263-8a0d-6f47d36d1204)
- [○ 1 SOURCE] Short interest in US equities rose to 3.79 % of the S&P 500 float and 6.3 % of the Russell 3000. (a40edee8-12fa-4a4e-9ea0-c98ca8aa54de)
- [○ 1 SOURCE] Tesla's stock fell 14.5% on the day. (bdc36fa6-3e11-4263-8a0d-6f47d36d1204)