U.S. Tech Giants Face Scrutiny Over AI Capital Spending in Q2 Earnings

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AI summary iconSummary
The Q2 earnings season for leading U.S. tech firms is highlighting AI-related capital spending, as the Fear & Greed Index presents mixed signals. Alphabet, Tesla, Microsoft, and Meta have already reported results, with Apple and Amazon set to follow. Alphabet’s revenue reached $119.8 billion, but capital expenditures rose to $44.9 billion, pushing free cash flow into negative territory. Tesla’s adjusted EPS missed forecasts, and operating profit declined by 57%. Meta’s revenue increased 28% to $60.8 billion, with capital spending hitting $31.08 billion. Microsoft outperformed with $90 billion in revenue and $4.81 in EPS. As altcoins to watch gain momentum, investors are closely monitoring how tech giants balance AI growth with profitability.

ChainThink reports that on July 30, the earnings season for the seven U.S. tech giants entered the phase of testing AI capital expenditures.

As of after-hours trading on July 29 in Eastern Time, Alphabet, Tesla, Microsoft, and Meta have released their earnings reports. Apple and Amazon will report after-hours on July 30, and NVIDIA is expected to disclose its latest quarterly results on August 26.

The recently published financial reports show that capital expenditures related to AI continue to rise, with market focus shifting toward return on investment, free cash flow, and the sustainability of growth.

Alphabet's second-quarter revenue was $119.8 billion, a 24% year-over-year increase; Google Cloud revenue was $24.8 billion, up 82% year-over-year.

However, quarterly capital expenditures rose to $44.9 billion, free cash flow turned negative at -$5.9 billion, and the 2026 capital expenditure guidance was raised to $195 billion to $205 billion.

Tesla's second-quarter revenue was $28.24 billion, a 26% year-over-year increase, with deliveries of 480,100 vehicles, up 25% year-over-year; however, adjusted EPS was $0.33, below market expectations.

Operating profit decreased by 57% year-over-year to $398 million, with free cash flow of -$1.092 billion.

Meta's second-quarter revenue was $60.8 billion, a 28% year-over-year increase, but EPS came in at $6.18, below market expectations. Capital expenditures reached $31.08 billion, free cash flow declined to $784 million, and the company revised its full-year capital expenditure guidance to $130 billion to $145 billion.

Microsoft temporarily stands out as a positive example. Its fourth-quarter revenue reached $90 billion, up 18% year-over-year, with EPS of $4.81 and net profit of $35.8 billion, up 31% year-over-year.

Microsoft Cloud revenue reached $59.3 billion, up 27% year-over-year; Azure grew 43%, and paid users of Microsoft 365 Copilot exceeded 30 million.

The market will next focus on how Apple, Amazon, and NVIDIA align their AI investments with revenue generation in their upcoming earnings reports.

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