Tesla and Alphabet shares fall due to higher AI spending

Tesla and Alphabet shares come under pressure following announcements of significantly higher investments in artificial intelligence. Investors are reacting with concern to the rapidly rising costs of the AI race, which is directly translating into red numbers for both tech giants.

Alphabet raises capital expenditure to record high

Google parent company Alphabet sees its share fall by around 4% in premarket trading after the company sharply raises its capital expenditure forecast for 2026. Expected investments now stand between $195 billion and $205 billion for this year. That is an amount that is raising eyebrows among many investors.

The share closed on 23 July at $341.91, a decline of 1.24% or $4.28 compared with the previous close of $346.19. In premarket trading, the decline continues with another 3.24%, bringing the share to $330.82. Alphabet’s market capitalisation currently stands at $4.16 trillion.

Tesla sees capex more than double

It is also an unpleasant morning for Tesla. The share falls more than 5% in premarket trading after the release of its quarterly results. These figures show that capital expenditure in the second quarter surged by 142% to $5.79 billion. A massive leap that demonstrates just how seriously Tesla is pursuing its AI ambitions.

On 23 July, the share closed at $374.01, a loss of 1.30% or $4.92. In premarket trading, the loss widens further to 5.28%, bringing the price to $354.28. Blockchainstories previously reported that Tesla is holding its entire Bitcoin position despite an unrealised loss, demonstrating that the company is willing to take significant financial risks for long-term goals.

Investor concern grows

The market reaction shows that investors are taking an increasingly critical view of the enormous sums tech companies are pumping into AI. Although both Tesla and Alphabet present the investments as necessary to remain competitive, the market is questioning when these outlays will pay off.

The concerns extend beyond just these two companies. The AI race is forcing nearly all major tech players to raise their budgets, and that is starting to become visible in quarterly results. Whether the returns will ultimately justify the costs is a question to which investors are not getting a clear answer for now.