Shares of Alphabet and Tesla declined in premarket trading after both companies unveiled plans for significantly higher artificial intelligence spending, raising investor concerns about mounting capital costs, according to the report.
Alphabet lowered its free cash flow outlook and increased its annual capital expenditure forecast to between $195 billion and $205 billion, with executives warning spending could rise further in 2027.
According to the report, both companies defended the increased spending, arguing the investments will support future growth. Tesla highlighted expansion of its Optimus humanoid robot program and semiconductor production, while Alphabet said additional spending is needed to meet surging demand for AI computing capacity.
The report also noted positive business trends. Google Cloud revenue surged 82%, while Tesla's automotive division posted a 23% increase in revenue, suggesting some AI investments are beginning to generate stronger financial returns.
Related Tweet:
Shares of Alphabet and Tesla fell in premarket trading on Thursday after both firms signalled increased AI spending, unnerving investors worried about the mounting costs of the artificial intelligence boom.
— CNBC (@CNBC) July 23, 2026
Alphabet shares were around 4% lower, while Tesla’s stock fell over 5%… pic.twitter.com/aJKlWrcz9V
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