Tesla and Alphabet shares drop as AI spending concerns spook investors
Alphabet and Tesla shares declined in premarket trading Thursday after both companies signaled increased artificial intelligence spending. Investors expressed concern over the rising costs associated with the AI boom.
Shares of Alphabet and Tesla fell in premarket trading Thursday, following announcements from both companies indicating higher spending on artificial intelligence. The news appeared to unnerve investors concerned about the escalating costs of the AI boom.
Alphabet's stock dropped approximately 4%, while Tesla's shares declined over 5% in premarket activity. Both technology giants reported negative free cash flow for the second quarter.
Alphabet revised its capital expenditure forecast for the year upward, projecting between $195 billion and $205 billion, and warned of potentially higher figures in 2027. This follows a previous forecast of $180 billion to $190 billion.
Tesla reported a substantial 142% year-on-year surge in its capital expenditures for the second quarter, reaching $5.79 billion. The company anticipates exceeding $25 billion in capital spending for the full year. CEO Elon Musk cited investments in areas such as semiconductor production and the company's Optimus humanoid robot as key drivers of this increased expenditure.