Tech Giants Face Mixed Fortunes: Google Soars on AI Ambition, Tesla Stumbles Amid Policy Shifts
US stock futures exhibited varied movements after recent earnings disclosures from Alphabet and Tesla. Nasdaq 100 futures experienced a rise of more than 0.3%, while Dow Jones Industrial Average futures dipped by more than 0.2%, and S&P 500 futures held steady.
Alphabet, Google's parent, surpassed second-quarter financial expectations due to robust performance in advertising and cloud services. The company posted adjusted earnings per share of $2.31 on revenue, excluding traffic acquisition costs, of $81.2 billion, exceeding analyst predictions. Google Cloud Platform revenue hit $13.6 billion. Despite strong results, Google announced an increased capital expenditure forecast of approximately $85 billion, an increment of $10 billion, primarily for AI development. Alphabet's stock advanced by over 2% overnight. However, Google faces potential consequences from an antitrust ruling, which could impact its search dominance.
In contrast, Tesla's second-quarter results fell short of expectations, marking its most significant quarterly sales decline in over a decade. The electric vehicle maker reported revenue of $22.50 billion, a decrease of more than 10% from the prior year. Adjusted EPS was $0.40, with operating income at $923 million. Revenue from regulatory credit sales also declined. Tesla's CFO indicated that the expiration of a significant EV tax credit would affect the business, potentially causing "a few rough quarters." Despite challenges, plans for a more affordable model and robotaxi production remain on schedule. Tesla's stock dropped nearly 6% in early European trading. The company is also navigating increased competition and shifts in consumer preferences.
In wider market news, President Trump stated that US trading partners might face tariffs ranging from over 10% to 50%. Other corporate earnings showed mixed outcomes, with Chipotle's stock falling after continued sales declines, and IBM's stock dipping despite beating profit expectations due to disappointing software sales. Upcoming earnings include Intel and American Airlines.
