Big Tech earnings season kicks off with overall positive results for Alphabet, which reported a second quarter that exceeded market expectations thanks to the continued expansion of its cloud business and growing demand for artificial intelligence services. Revenue reached $119,8 billion, beating analysts' consensus, standing at around 117,1 billion.
Earnings per share also surprised the market, although the figure was influenced by a significant capital gain related to the financial investments held by the group, a factor that makes it less immediate to compare with the estimates formulated by analysts before the publication of the accounts. More complex scenario for Tesla, which also recorded revenues higher than market expectations, but disappointed in terms of profitability.
Alphabet is supported by the growth of Google Cloud
Google Cloud was the main driver of growth, now considered by investors to be the key litmus test of AI strategy. The division posted revenues of $24,8 billion, an 82% increase over the same period last year, well above market expectations of 60% growth. This result confirms that demand for cloud infrastructure, language models, and AI services continues to accelerate, pushing large companies to increase investments in digital transformation.
The advertising business also showed good performance. Advertising revenue reached $81,6 billion, slightly above Wall Street expectations, while the Search segment performed broadly in line with forecasts. The integration of artificial intelligence capabilities into search engines continues to be one of the elements most closely monitored by investors, who seek indications of the group's ability to maintain its leadership in the online search market.
Alphabet: Data Center Investments Continue to Rise
One of the most discussed aspects of the quarterly report concerns investments. Alphabet continues to allocate unprecedented resources to the construction of new data centers, to purchase processors dedicated to artificial intelligence and to expand the computing capacity needed to support the growth of Gemini and Google Cloud.
In the quarter Capital expenditures reached approximately $45 billion, while the market continues to expect overall investments in the order of 180-190 billion dollars during 2026. These are levels never previously reached by the group, justified by management with the need to satisfy a demand for AI services that even exceeds available capacity.
The company has not changed its strategic approach, confirming that it intends to continue to prioritize investments in artificial intelligence even at the cost of compressing, at least in the short term, profitability growth.
Tesla grows revenue but misses the profit target
Elon Musk's creature instead presented a quarterly report characterised by revenues higher than market expectations but by a profitability lower than consensus, a factor that prompted investors to take profits in trading after the Wall Street close.
The market, however, rewarded the growth in deliveries, which in second quarter reached the record of over 480 thousand vehicles, the best second quarter in the group's history, allowing the group to increase revenue compared to the same period of the previous year. However, operating profit was affected by pressure on margins, resulting from the commercial policies adopted to support demand and the continuation of significant investments in the development of artificial intelligence: autonomous driving, the humanoid robot Optimus, and the future Robotaxi platform.
Tesla: Energy sector makes positive contribution
Tesla thus closed the second quarter with revenues of 28,2 billion dollars, up approximately 25% compared to 22,5 billion in the same period of 2025 and exceeding analysts' expectations, which stood at around 26,4 billion. Adjusted earnings per share (EPS) stood at $0,33, well below the consensus of $0,53, while net income fell to $1,1 billion, versus analysts' expectations of $1,8 billion. Capital expenditures reached $5,8 billion in the quarter, contributing to negative free cash flow of $1,1 billion, the first negative figure in over two years.
The energy sector, on the other hand, made a positive contribution, recording a new record with 13,5 GWh of storage systems installed in the quarter, confirming how the battery business is taking on an increasing weight compared to the Megapack and Powerwall battery activities within the group's business model.
Analysts' expectations and the market's reaction
Before the results are published, Analysts believed Alphabet would benefit from Google Cloud's continued expansion and the growing monetization of artificial intelligence. Expectations were generally exceeded, largely thanks to the performance of the cloud division, which was the main factor supporting the stock.
For Tesla, however, the consensus focused mainly on the evolution of automotive margins, considered the true indicator of growth sustainability. Although revenues performed better than expected, the final result failed to dispel doubts about the company's future profitability, still engaged in a profound transformation from an automotive manufacturer to a group focused on artificial intelligence and robotics.
The market's reaction reflected this different reading of the two quarterly results. Alphabet benefited from the optimism generated by its cloud results and the confirmation of strong demand for AI services, gaining 0,3% in after-hours trading, while Tesla stock lost more than 3% in last night's trading, with investors expressing concern about lower-than-expected profitability and the very high level of investment needed to support Elon Musk's artificial intelligence-focused strategy.
