Tesla and Alphabet lose hundreds of billions in market value after earnings signal massive AI spending

Published Jul 23, 08:26 PM UTC

Shares of Tesla and Alphabet plunged on July 23, 2026, wiping out hundreds of billions in market capitalization after both companies reported earnings that signaled sharply higher capital expenditures on artificial intelligence. Tesla stock fell 14.5%, losing about $200 billion in market cap, while Alphabet dropped 7.1%, losing roughly $300 billion. Amazon also fell 4.6%, losing about $120 billion. The sell-off was driven by investor concerns over mounting AI costs. Alphabet raised its 2026 capex forecast to $195-205 billion and warned of higher spending in 2027. Tesla reported a 142% year-on-year surge in Q2 capex to $5.79 billion, with over $25 billion expected for the full year. Both companies reported negative free cash flow for Q2. Despite the spending, there were bright spots: Google Cloud revenue jumped 82% to $24.8 billion, and Tesla's automotive revenue rose 23% to $20.52 billion. Management at both firms attempted to reassure investors about long-term returns.