Is Big Tech Burning Too Much Cash on AI? Alphabet and Tesla Just Made Investors Ask That Question

TLDR

• The Nasdaq fell more than 2.5% on Thursday, dragged down by Alphabet and Tesla
• Alphabet posted its first-ever quarterly free cash flow burn, spending $44.9 billion on capex in Q2
• Tesla shares fell 13.5% after weak margins and $5.8 billion in quarterly capex spending
• Big Tech stocks including Amazon, Meta, and Microsoft also fell sharply
• Analysts warn capex across five major tech firms could outpace free cash flow by 2027

Alphabet and Tesla reported quarterly results that rattled Wall Street on Thursday. Both companies posted heavy capital expenditure figures that more than wiped out their free cash flow, raising questions about whether AI spending will ever pay off at the pace investors need.

The Nasdaq Composite fell 2.8% to close near 24,975. The S&P 500 dropped 1.5% and the Dow Jones Industrial Average shed 1.2%.

The Numbers Behind the Selloff

Alphabet’s Q2 revenue came in at $119.8 billion, beating the $116.9 billion consensus. Google Cloud jumped to $24.8 billion, up 82% year over year.

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