LIVE: Tesla and Alphabet beat earnings

Alphabet finance chief Anat Ashkenazi said Google still does not have enough computing capacity to meet the level of demand coming from cloud clients and its own teams.

To cover the gap, Google plans to use more infrastructure from outside providers during the third quarter while it continues adding its own equipment. Anat said the temporary fix will help the company take on more customers, though it will put some pressure on profit margins in the near term.

Alphabet spent $44.9 billion on capital projects during the quarter, with most of that money going toward the infrastructure behind its AI services. Around 60% of the infrastructure budget went into servers, while the remaining 40% funded data centers and networking systems.

Alphabet CEO Sundar Pichai said some of Google Cloud’s biggest customers need unusually large amounts of computing power right now. Sundar said supporting them through outside suppliers may be expensive for several months, but the contracts should still generate strong returns over their full lifespan once Google’s own capacity catches up.

Usage of Google’s AI products continued to rise. The Gemini app now has 950 million monthly users, while Gemini models handle 22 billion tokens every minute.

Google’s AI coding platform, Antigravity, has also grown to more than 2.4 million weekly users. Sundar did not disclose how many of them pay for the service.

Antigravity has a free version and is included with the Google AI Pro plan at $19.99 a month and the Google AI Ultra plan at $99.99 a month. Google also sells separate packages to businesses.

Users can choose between models made by Google and Anthropic, along with an open model released by OpenAI last year. Antigravity does not currently offer systems from Chinese developers DeepSeek, Moonshot AI or Z.ai.

Anat also warned that Google Search will face a tougher year-over-year comparison in the third quarter. AI additions are still helping the company improve the experience for users and advertisers, but Google will soon be measuring its results against the stronger growth that began during the same period last year.

Second-quarter Search revenue reached $63.3 billion, narrowly missing Wall Street’s $63.4 billion estimate.

Alphabet posted a much stronger fiscal second quarter than Wall Street expected, helped by rapid growth in cloud computing and continued demand for its artificial intelligence products.

The Google parent generated $119.8 billion in revenue, topping the $116.93 billion forecast compiled by LSEG. Sales rose 24% from the same quarter last year, or 23% when currency movements were excluded.

That marked Alphabet’s 12th straight quarter with double-digit revenue growth.

The company reported earnings of $9.11 per share, compared with the $2.89 figure analysts had projected. Profit attributable to common shareholders climbed 298%, while earnings per share increased 294%.

A large investment-related gain helped lift the bottom line. Alphabet recorded $98 billion in other income, mainly from paper gains on shares it owns in other companies.

The company’s main Google Services division brought in $94.5 billion, up 15% from a year earlier.

Revenue from Google Search and related products grew 17%. The subscriptions, platforms and devices category expanded 15%, while YouTube advertising sales rose 13%.

The biggest increase came from Google Cloud, where quarterly revenue shot up 82% to $24.8 billion. Alphabet said businesses spent more on its AI infrastructure, corporate AI tools and traditional Google Cloud Platform services.

Companywide operating profit increased 30%. Alphabet’s operating margin reached 34%, two percentage points higher than it was a year ago.

Google and Alphabet CEO Sundar Pichai said spending on artificial intelligence was changing how every major part of the company operates.

Sundar pointed to growing business demand for Gemini Enterprise, which is now being used by nearly 90% of Fortune 100 companies.

Google’s AI models are handling 22 billion application programming interface tokens every minute, while the Gemini app has reached 950 million monthly active users.

New AI tools inside Google Search are also leading people to submit more queries. The company said demand for its cybersecurity products remained strong as well. Sundar said:

“These outstanding results show that our differentiated, full stack approach to AI is delivering real, measurable value for consumers, customers, and our partners globally.”

Alphabet recently introduced Gemini 3.5 Flash Cyber, a lower-cost model designed to handle advanced security work without requiring the same level of spending as larger systems.

YouTube also saw heavy viewing tied to major global events. More than 1.7 billion individual viewers watched videos connected to the 2026 FIFA World Cup during the tournament.

Alphabet said the quarter showed that its approach of controlling everything from AI chips and infrastructure to models and consumer products was producing measurable results across its businesses.

Tesla shares moved lower after Wednesday’s close after the electric vehicle maker posted second-quarter profit below Wall Street’s target, even though total sales came in ahead of forecasts.

The reaction added to an already difficult stretch for the stock. Tesla has lost about 11% this month and 17% since the start of the year.

SpaceX, the other trillion-dollar company run by Elon Musk, has also been under pressure. Its valuation has dropped by more than 40% from its highest closing level following its record June market debut.

Tesla’s quarterly revenue rose 26% to $28.24 billion, compared with $22.5 billion during the same period last year.

Profit moved in the opposite direction. Net income fell 5% to $1.11 billion, or $0.32 per share, from $1.17 billion, or $0.33 per share, one year earlier.

The company’s main vehicle division brought in $20.52 billion, marking a 23% annual increase.

Sales from Tesla’s solar and battery-storage operation grew 13% to $3.14 billion. Its services and other unit, which includes payments for repairs on cars no longer covered by warranty, generated $4.58 billion, up 50% from the previous year.

Costs grew much faster than overall sales as Tesla increased spending on artificial intelligence, product development and other research programs.

Second-quarter operating expenses jumped 47% to $4.35 billion.

The S&P 500 barely moved on Wednesday as a sharp jump in crude prices offset some of the optimism surrounding the latest company results. The Nasdaq Composite fell 0.3%, while the Dow Jones Industrial Average gained 35 points, or 0.1%.

Energy markets took center stage after the United States carried out attacks on Iran for an 11th consecutive day. Brent crude climbed 3%, trading above $94 a barrel after briefly crossing $95, its strongest price in more than a month. West Texas Intermediate also rose roughly 3%, moving beyond $86 a barrel.

Secretary of State Marco Rubio said Tehran was “not serious about talks” and warned that Washington was prepared to act if negotiations failed.

“If they’re serious, we’re serious. If they’re not, then we will do what is necessary to protect our interests and also the interests of our allies,” he said.

Marco added that US forces would “continue to protect shipping” through the Strait of Hormuz.

The latest oil rally has raised fresh concerns about inflation. More expensive fuel can increase transportation and production costs, keeping prices for everyday goods high. That could put additional pressure on the Federal Reserve to consider another interest-rate increase.

Company earnings created some of the day’s biggest stock moves. Super Micro Computer shares soared 21% after the server manufacturer predicted stronger-than-expected profit margins for its fiscal fourth quarter. The company also said it secured more than $60 billion in fresh orders during the period.

AT&T gained 2% after its second-quarter numbers beat forecasts. GE Vernova, however, sank 8% after its quarterly profit came in below expectations.

Precious metals moved higher as the conflict between the United States and Iran continued to unsettle financial markets. Gold futures rose 1.17% to $4,125, their highest level in two weeks, while spot gold advanced 1.08% to $4,120.32.

Investors increased their exposure to bullion as the fighting entered another day and uncertainty remained high.

Silver futures added 1.26% to $59.86, while the spot price climbed 1.25% to $59.52.

The broader metals market also strengthened. Platinum rose 1.36% to $1,659.80, and palladium gained 1.27% to $1,303.

Alphabet will publish its fiscal second-quarter results after Wednesday’s market close. Analysts tracked by LSEG are looking for $2.89 in earnings per share and $116.9 billion in revenue.

The numbers will give investors their first major look this earnings season at whether the enormous sums flowing into artificial intelligence infrastructure are paying off. Big technology companies have spent billions of dollars on new data centers as demand for computing power has climbed.

That buildout is now drawing more scrutiny because investors want to know whether customer demand can remain strong enough to justify the cost. FactSet’s consensus forecast puts Alphabet’s capital spending at $187.1 billion this year.

The company’s upcoming AI products will also be closely watched after its main new model was pushed back. Google introduced three lower-priced Gemini models on Tuesday, including one built around cybersecurity as advanced systems such as Anthropic’s Mythos create new security concerns.

Investors will be comparing Google’s models with products from Anthropic and OpenAI. Price has become a bigger issue for companies using AI tools because token expenses are rising, while lower-cost models from China are adding more competition.

Google’s advertising and cloud operations are expected to post strong growth. Search revenue is projected to reach $63.4 billion, up from $54.19 billion a year earlier.

YouTube advertising sales are estimated at $10.8 billion, compared with $9.8 billion during the same quarter last year. Revenue from Google Cloud is expected to climb to $22.3 billion from $13.62 billion.

Alphabet also has an advantage over Tesla in autonomous driving. Its Waymo unit is further ahead in the US robotaxi market, while Baidu’s Apollo Go holds a stronger position in China.

Tesla is also still developing its humanoid robot and faces a crowded field. Rivals include China’s Unitree, Boston Dynamics, Agility Robotics, Apptronik and London-based startup Humanoid.

Tesla will release its second-quarter numbers after Wednesday’s closing bell, roughly three weeks after revealing that vehicle handovers grew 25% from a year earlier.

Wall Street is looking for adjusted earnings of $0.51 per share on $25.71 billion in revenue, based on analyst projections compiled by LSEG.

The report comes during a rough stretch for Tesla’s stock. Shares have fallen about 10% in July and are sitting 16% lower for the year.

The weakness has come alongside an even steeper pullback at SpaceX, Elon Musk’s other company valued above $1 trillion. SpaceX made a record-setting stock market entrance in June, but its shares have since dropped nearly 40% from their highest closing price.

Tesla’s market slump has continued even though its main car business is showing some improvement. Earlier this month, the electric vehicle maker said it delivered more than 480,000 cars, beating what analysts had projected.

The company is still trying to reverse two straight years of shrinking annual deliveries. Chinese manufacturers such as BYD, Nio and Xiaomi have taken more ground by selling lower-priced electric cars packed with modern features, including in countries outside the United States.

Tesla has also faced resistance from some customers because of Elon’s political statements and his involvement with the Trump administration. Some buyers have responded by avoiding the brand.

US equity futures showed little movement on Tuesday evening ahead of a busy day of earnings by two companies from the Mag 7. The futures tracking Dow Jones Index shed 16 points whereas S&P 500 and Nasdaq-100 were near the unchanged mark.

The performance of Asian markets was mixed. Among them, South Korea was an exception with both Kospi and Kosdaq advancing over 5% and 2%, respectively. Japan’s Nikkei 225 rose 0.34%, while the Topix showed almost no movement. Australia’s S&P/ASX 200 added 0.12%. Hong Kong’s Hang Seng fell 0.66%, while China’s CSI 300 advanced 0.15%.

The calm futures session followed a stronger day on Wall Street. The main US indexes ended a three-day slide after 3M and General Motors delivered results that came in ahead of expectations. Those reports gave investors some relief about the strength of large American companies.

There were also semiconductor-related equities that contributed to the gains seen on Tuesday. The VanEck Semiconductor ETF rose by 4%, with funds returning to firms associated with artificial intelligence.

Meanwhile, cryptocurrencies also rode the wave with bitcoin rising above 2% in price and crossing the $67,000 level on Coinbase.

The rally comes after comments from Treasury Secretary Scott Bessent, who said lawmakers were at the “1-yard line” on the Clarity Act. Scott called on Congress to approve the long-delayed crypto bill before lawmakers leave for recess.