Updated

Updated · CNBC · Jul 23

Tesla, Alphabet Slide After Hours as AI Capex Rises and Free Cash Flow Turns Negative

Updated

Updated · CNBC · Jul 23

Tesla, Alphabet Slide After Hours as AI Capex Rises and Free Cash Flow Turns Negative

3 articles · Updated · CNBC · Jul 23

Tesla fell 4% and Alphabet dropped more than 3% after hours even after both beat revenue estimates, as investors focused on negative free cash flow and plans for heavier AI spending.
Alphabet widened its 2026 capex outlook to $195 billion-$205 billion from $180 billion-$190 billion, while Tesla reaffirmed more than $25 billion; free cash flow fell to negative $5.9 billion at Alphabet and negative $1.1 billion at Tesla.
Google said most of its $44.9 billion second-quarter capex went to AI infrastructure, with cloud revenue up 82%, while Tesla's capex jumped 142% to $5.79 billion as it retools factories for Cybercab, Optimus and a Texas AI chip plant.
The selloff lands as AI returns face closer scrutiny across Big Tech, with cheaper open-source models from China and tighter corporate AI budgets raising questions before Meta, Microsoft, Amazon and Apple report next week.

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Tech Giants’ $650 Billion AI Bet: Financial Strain, Market Reactions, and the Future of Work in 2026

Overview

In July 2026, Tesla chose to prioritize long-term growth by investing heavily in advanced technologies like autonomy, robotics, and AI, even though this meant sacrificing near-term profitability and straining its free cash flow due to rising operating costs and external pressures like commodity prices and interest rates. Meanwhile, Alphabet reported strong revenue and profit growth, driven by its booming cloud and AI businesses, but faced a muted stock market reaction as investors wanted even more aggressive capital spending on AI infrastructure. Both companies’ strategies highlight the intense competition and massive investments shaping the future of the tech industry.

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