Early in the morning, a bad surprise! U.S. technology giants plummet! what happened?
Google and Tesla both plummeted. In the early morning of July 23, Beijing time, Google’s stock price plummeted, once falling by more than 4%. In terms of news, although Google's latest financial results exceeded expectations in all aspects, the company announced that it had raised its full-year capital expenditure guidance to US$195 billion to US$205 billion, exacerbating market concerns about its cash flow prospects. The financial report shows that due to a significant increase in capital expenditures, Google's free cash flow in the second quarter has turned to -$5.855 billion. At the same time, Tesla’s stock price also fell sharply after the release of its financial report, once falling by more than 5%.
Google and Tesla both plummeted. In the early morning of July 23, Beijing time, Google’s stock price plummeted, once falling by more than 4%. In terms of news, although Google's latest financial results exceeded expectations in all aspects, the company announced that it had raised its full-year capital expenditure guidance to US$195 billion to US$205 billion, exacerbating market concerns about its cash flow prospects. The financial report shows that due to a significant increase in capital expenditures, Google's free cash flow in the second quarter has turned to -$5.855 billion. At the same time, Tesla’s stock price also fell sharply after the release of its financial report, once falling by more than 5%. The financial report showed that operating profit in the second quarter was only US$398 million, far lower than market expectations; free cash flow was -US$1.09 billion, the first negative number recorded in a single quarter since the first quarter of 2024. Google’s latest financial report is released On July 22, Eastern Time, in after-hours trading on U.S. stocks, Google’s stock price fell sharply. As of 6:40 on the 23rd, Beijing time, it fell 3.22%. At the close of U.S. stocks overnight, Google's stock price fell 1.46%. During the earnings call, Google announced that it had raised its full-year capital expenditure guidance to between US$195 billion and US$205 billion. It had previously expected to be US$180 billion to US$190 billion and would significantly increase investment in the future. The market is concerned about whether huge capital expenditures can bring corresponding returns and whether they will put huge pressure on the company's cash flow. In fact, Google’s parent company Alphabet announced second-quarter results that exceeded market expectations. Specifically: Alphabet achieved revenue of US$119.8 billion in the second quarter, a year-on-year increase of 24%, higher than market estimates of US$117.02 billion; Second-quarter operating profit was US$40.77 billion, a significant year-on-year increase of 30%, which was also higher than the market estimate of US$40.55 billion; Google Cloud revenue in the second quarter was US$24.77 billion, soaring 82% year-on-year, higher than market estimates of US$22.46 billion; Google services revenue in the second quarter was US$94.54 billion, compared with market estimates of US$94.32 billion. The financial report shows that due to the significant increase in unrealized gains on equity securities, Alphabet's other income reached US$97.98 billion in the second quarter, and net profit attributable to common shareholders increased by 298% year-on-year to US$112.107 billion. It is reported that Alphabet holds shares in many large technology companies, including Anthropic and SpaceX. At the same time, Alphabet’s capital expenditures in the second quarter were US$44.92 billion, exceeding market expectations of US$44.15 billion and much higher than the US$22.446 billion in the same period last year, reflecting Alphabet’s continued large-scale investment in data centers, AI servers and computing facilities. Alphabet CEO Sundar Pichai said: Our AI investments are redefining what is possible in every part of our business. " He pointed out that the adoption rate of Gemini Enterprise Edition continues to expand, with nearly 90% of Fortune 100 companies already using the product, Gemini App monthly active users have reached 950 million (exceeding the previous estimate of 920 million), and the Gemini model currently processes 22 billion API tokens per minute. Pichai also revealed that the backlog of orders for Google Cloud business that have been contracted but have not yet confirmed revenue has increased to 514 billion U.S. dollars, exceeding 500 billion U.S. dollars for the first time. Anat Ashkenazi, Google's chief financial officer, said in an interview with analysts: "This increase in spending range is mainly because the company is accelerating the delivery of production capacity to meet growing demand. " At the same time, Tesla also disclosed its financial report for the second quarter of 2026. The company achieved revenue of US$28.24 billion in the second quarter, exceeding market expectations and growing by 26% year-on-year. It was the first time in three years that revenue growth exceeded 20% year-on-year; operating profit in the second quarter was only US$398 million, far lower than market expectations of US$1.39 billion; adjusted earnings per share (EPS) was US$0.33, down 18% year-on-year, and significantly lower than expected; gross profit margin was 16.8%, lower than analysts' expectations of 19.4%.
This means that Tesla has fallen into the embarrassing situation of "increasing revenue without increasing profits". Affected by this, Tesla's stock price fell sharply after the market closed, once falling by more than 5%. The financial report shows that the automotive business is the main source of Tesla’s second-quarter revenue exceeding expectations. In the second quarter, the monthly revenue contributed by automobiles reached US$20.52 billion, higher than market expectations; the revenue contributed by services and other businesses was US$4.58 billion. The number of active subscribers of FSD reached 1.48 million, higher than analysts' expectations of 1.4 million, showing that the software subscription business is still expanding. It is worth noting that Tesla’s free cash flow in the second quarter was -$1.09 billion, the first time since the first quarter of 2024 that it recorded negative numbers in a single quarter. Tesla executives said that the negative free cash flow was due to capital expenditures (Capex) more than doubling in the second quarter. Capex is expected to continue to grow in the next two to three years, and reiterated that Capex will exceed US$25 billion this year. Tesla clearly pointed out in its financial report announcement that the company is in the largest and most exciting investment stage and will still need to make great efforts in the future. It is committed to using AI technology to transform the fields of transportation, energy and productivity. The expansion of business scale will show non-linear characteristics, and the company has always focused on creating long-term value. These remarks imply that the pace of massive investment will not slow down, and the pressure on profitability will be amplified. In terms of AI computing power, Tesla said that in the first half of 2026, the on-site computing power at the Texas Gigafactory in terms of power consumption has more than doubled. The second-generation AI training supercomputer cluster Cortex 2 launched this year consumes more than 115MW of power. It supports the development of autonomous driving software for vehicles and humanoid robots. Tesla will further increase the scale of computing power during the rest of the year to ensure that the company has sufficient computing resources. Tesla CEO Musk said in a conference call that Optimus is the company's most difficult product to achieve large-scale mass production.
This means that Tesla has fallen into the embarrassing situation of "increasing revenue without increasing profits". Affected by this, Tesla's stock price fell sharply after the market closed, once falling by more than 5%. The financial report shows that the automotive business is the main source of Tesla’s second-quarter revenue exceeding expectations. In the second quarter, the monthly revenue contributed by automobiles reached US$20.52 billion, higher than market expectations; the revenue contributed by services and other businesses was US$4.58 billion. The number of active subscribers of FSD reached 1.48 million, higher than analysts' expectations of 1.4 million, showing that the software subscription business is still expanding. It is worth noting that Tesla’s free cash flow in the second quarter was -$1.09 billion, the first time since the first quarter of 2024 that it recorded negative numbers in a single quarter. Tesla executives said that the negative free cash flow was due to capital expenditures (Capex) more than doubling in the second quarter. Capex is expected to continue to grow in the next two to three years, and reiterated that Capex will exceed US$25 billion this year. Tesla clearly pointed out in its financial report announcement that the company is in the largest and most exciting investment stage and will still need to make great efforts in the future. It is committed to using AI technology to transform the fields of transportation, energy and productivity. The expansion of business scale will show non-linear characteristics, and the company has always focused on creating long-term value. These remarks imply that the pace of massive investment will not slow down, and the pressure on profitability will be amplified. In terms of AI computing power, Tesla said that in the first half of 2026, the on-site computing power at the Texas Gigafactory in terms of power consumption has more than doubled. The second-generation AI training supercomputer cluster Cortex 2 launched this year consumes more than 115MW of power. It supports the development of autonomous driving software for vehicles and humanoid robots. Tesla will further increase the scale of computing power during the rest of the year to ensure that the company has sufficient computing resources. Tesla CEO Musk said in a conference call that Optimus is the company's most difficult product to achieve large-scale mass production.