Tesla, Alphabet stock falls as AI spending concerns spook investors
Tesla and Alphabet stocks dropped significantly after both companies reported massive increases in capital expenditure for artificial intelligence initiatives. Investors expressed concern over the mounting costs and the timeline for returns on these heavy investments.
Why it matters
The market reaction reflects growing investor anxiety regarding the profitability and sustainability of the current AI infrastructure spending boom.
Shares of Alphabet and Tesla fell on Thursday after both companies signaled increased AI spending , unnerving investors worried about the mounting costs of the artificial intelligence boom.
Tesla stock closed 14.5% lower while Alphabet lost 7.1%. Elon Musk 's EV maker posted its worst day since March 2025.
Tesla lost about $200 billion in market cap on Thursday, while the Google parent saw about $300 billion wiped out.
Both companies reported negative free cash flow for the second quarter on Wednesday. Alphabet raised its capital expenditure forecast for this year to $195 billion to $205 billion and warned of higher figures in 2027. The Google parent company's previous projection was for capex between $180 billion and $190 billion.
Tesla, meanwhile, said capex surged 142% year on year in the second quarter to $5.79 billion. The company said it expects more than $25 billion in capex this year.
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