Why Google and Tesla Shares Fell While Their AI Suppliers Surged This Week
TLDR
- Alphabet and Tesla both reported negative free cash flow in Q2 2026
- Alphabet’s stock fell 8%, shedding around $330 billion in market value
- Tesla dropped 18%, losing roughly $250 billion — its worst week since 2022
- AI suppliers like Supermicro and Digital Realty surged as big tech spending increased
- The Magnificent Seven lost around $880 billion while the broader S&P 500 finished flat
Google’s parent company Alphabet and Tesla both reported negative free cash flow in their latest quarterly results, sending their stocks sharply lower and raising questions among investors about AI spending discipline.
Alphabet posted revenue of $119.8 billion, up 23% year over year. Its cloud business grew 82%. Despite those strong numbers, the stock fell around 8%.
The issue was cash. Alphabet spent $45 billion in the second quarter alone — $27 billion on servers and $18 billion on data centers. That pushed free cash flow to negative $5.9 billion, the first time it has gone negative since the company went public in 2004.
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