Alphabet, Tesla Shares Fall After-Hours on Earnings Misses and Rising AI Costs

U.S. stock index futures were little changed in Wednesday evening trading, while shares of Alphabet and Tesla fell after their second-quarter earnings reports failed to impress investors concerned about the soaring costs of artificial intelligence development.

The reports from the two tech bellwethers fueled existing anxieties over high valuations in the technology sector, which weighed on markets during the regular session.

Tech Giants Report Higher Spending

Alphabet Inc. (GOOGL) saw its shares fall 2.4% in aftermarket trading. The Google parent company missed adjusted earnings per share estimates and announced a significant increase in its capital expenditure plans for 2026, hiking the forecast by $15 billion to a range of $195 billion to $205 billion.

Despite strong demand for its AI and cloud services and better-than-expected growth in Google Cloud, the company reported negative free cash flow for the first time in its history. The heavy spending on AI and cloud infrastructure appeared to spook investors, highlighting the substantial costs required to compete in the AI race.

Tesla Inc. (TSLA) shares slid nearly 4% in late trading after the electric vehicle maker's bottom-line figures for the June quarter missed analyst expectations. The company also turned cash-flow negative, citing outsized spending on AI and robotics alongside tighter margins in its core automotive business.

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While Tesla reported a substantial improvement in its core EV sales, the increased capital spending weighed on overall profitability, disappointing the market.

Broader Market Muted

The muted reaction in the broader futures market followed a mixed day on Wall Street. As of 9:02 PM ET, futures contracts for the major indexes showed modest movements:

• S&P 500 Futures rose 0.1%.
• Nasdaq 100 Futures gained 0.26%.
• Dow Jones Futures were up 0.1%.

The post-earnings slides for Alphabet and Tesla underscore a key theme for investors: the high cost of AI innovation is beginning to pressure the profitability of even the largest technology companies.