Alphabet and Tesla shares fell as investors reacted to heavy capital expenditures on artificial intelligence infrastructure.
Alphabet and Tesla saw significant share price declines on Thursday as investors weighed the high costs of artificial intelligence development. Alphabet shares fell 7.13%, erasing approximately $293 billion in market value, while Tesla stock plunged 14.5% to reach yearly lows. Both companies reported negative free cash flow for the second quarter, a result of aggressive spending on infrastructure. Alphabet reported capital expenditures of $44.9 billion for the second quarter and raised its full-year guidance to a range of $195 billion to $205 billion. The administration previously took an equity stake in Intel, which has seen a 320% stock increase since the federal government converted CHIPS Act funding into an $8.9 billion investment. Meanwhile, Tesla committed to $25 billion in capital expenditures for 2026, roughly triple its historical spending. While analysts expect strong revenue growth from major tech firms like Microsoft, Meta, and Amazon next week, the market remains cautious about whether these massive investments will generate commensurate financial returns.