Alphabet and Tesla shares fell as investors reacted to significant increases in capital expenditures for artificial intelligence infrastructure.

Alphabet and Tesla saw their share prices drop on Thursday as investors weighed the mounting costs of the artificial intelligence boom. Alphabet, the parent company of Google, reported negative free cash flow for the first time in a decade, primarily due to a capital expenditure forecast increase to $205 billion for the year. While the company's cloud revenue grew by 82%, the heavy spending on AI data centers and servers led to a nearly 7% decline in stock value. Simultaneously, Tesla reported a profit miss and negative free cash flow as it prepares for a "massive capex year." The company expects to spend up to $25 billion this year, nearly double its 2025 spending, to advance its AI capabilities, humanoid robots, and autonomous vehicles. Elon Musk stated that the company aims to spend as fast as possible without being wasteful. Despite the heavy investment, analysts remain focused on how quickly these expenditures will translate into tangible financial returns and a clear competitive advantage for both tech giants.

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