Alphabet and Tesla Shares Sink on Massive AI Spending

Shares of Alphabet Inc. and Tesla fell in after-market trading on Wednesday, July 23, 2026, as investors reacted to surging artificial intelligence infrastructure costs. Alphabet reported revenue of $119.8 billion, a 24% year-over-year increase, driven by an 82% jump in Google Cloud revenue. However, the company raised its full-year capital expenditure guidance to between $195 billion and $205 billion, up from a previous range of $180 billion to $190 billion. This spending led to a negative cash balance for the first time in at least 10 years, causing the stock to drop over 7% and fall below its 200-day moving average.

Tesla beat revenue expectations with $28.2 billion but missed earnings estimates, reporting 33 cents per share against a predicted 51 cents. The company reiterated plans to spend over $25 billion on self-driving technology, robotics, and a chip-manufacturing plant in Texas, resulting in a quarterly free cash flow deficit of $1.1 billion. The company also dismantled assembly lines at its Fremont factory to prioritize production of the Optimus humanoid robot.

Meanwhile, International Business Machines Corporation reported $17.16 billion in revenue, missing estimates as Z mainframe sales fell 42%. This decline occurred as customers shifted spending toward AI hardware. These results collectively signal investor anxiety regarding the timeline and certainty of returns on massive AI investments, especially as cheaper open-source models emerge.