Alphabet and Tesla Stock Drop 3-4% After Q2 Beat on Capex Concerns, July 22

According to CNBC, on July 22, Alphabet and Tesla reported second-quarter revenue that beat market expectations, yet spooked investors with massive capital expenditure plans and negative free cash flow shifts. Tesla shares fell 4% and Alphabet declined 3% in after-hours trading.

Alphabet raised its full-year capital expenditure guidance to $19.5–$20.5 billion from $18–$19 billion, signaling aggressive AI infrastructure investment. Tesla reconfirmed capital spending of $25 billion or more for 2026, a roughly 200% increase year-over-year, with Q2 capex hitting $5.79 billion, up 142% from the prior year. Both companies swung to negative free cash flow: Tesla posted a $1.1 billion deficit versus a $146 million surplus a year ago; Alphabet shifted from a $25 billion surplus to a $5.9 billion deficit. Google Cloud revenue surged 82% year-over-year, exceeding expectations, though market concerns over AI spending returns persist.