In premarket trading on Thursday, shares of Alphabet fell approximately 4% and Tesla's stock declined over 5% as both companies indicated significant increases in their artificial intelligence-related capital expenditures.
Alphabet raised its capital expenditure forecast for the year to between $195 billion and $205 billion, up from a previous estimate of $180 billion to $190 billion, and warned of even higher spending in 2027. Tesla reported a staggering 142% year-on-year increase in capital expenditures for the second quarter, totaling $5.79 billion, and anticipates spending over $25 billion this year.
Despite these increases, both companies' management attempted to reassure investors. Tesla CEO Elon Musk expressed confidence in the returns from their investments, particularly in semiconductor production and the development of the Optimus humanoid robot. Alphabet's CEO noted that the spending surge is driven by a need to enhance computing capacity to meet growing AI demand.
While the increased spending has raised concerns, there were positive signs as Google's cloud revenue surged 82% to $24.8 billion, and Tesla's automotive revenue rose 23% year-on-year to $20.52 billion