Tesla’s latest earnings report disappointed investors. Revenue for the second quarter came in at $22.5 billion—below the $22.64 billion forecast. That’s a steep 12% drop from last year. Earnings per share also missed, hitting $0.40 instead of the expected $0.42. As a result, Tesla shares plunged nearly 6% in early European trading and over 5% in after-hours U.S. markets.
The bigger concern? Tesla’s automotive revenue dropped 16% year over year. A sharp decline in regulatory credit sales and weakening demand in key markets like Europe and the U.S. have raised red flags. On the earnings call, CEO Elon Musk warned that U.S. policy changes, especially the end of EV tax credits, could lead to “a few rough quarters” ahead. Investors are nervous, and rightly so.
Tesla Bets on Affordable Models, but Timeline Raises Questions
In the face of slowing sales, Tesla says help is on the way. The company plans to start building a more affordable model in 2025. Volume production could begin in the second half of that year. Tesla also says robotaxi production is still on track for 2026. But investors remain skeptical.
Why? So far, there are no confirmed images or prototypes of this budget-friendly Tesla. The cheapest current option, the Model 3, still starts at $43,000—far from “affordable” for most buyers. Even worse, Tesla admitted that EV deliveries could be delayed later this year. With demand softening and competition rising, timelines may not be enough to win over investors. Musk’s bold plans need proof, and fast.
Google Earnings Shine Bright Amid Tesla’s Slump
While Tesla stumbled, Google-parent Alphabet delivered a standout earnings report. Alphabet reported $81.2 billion in revenue, beating expectations. Earnings per share hit $2.31, also topping forecasts. This came largely from strong ad revenue and massive growth in Google Cloud, which brought in $13.6 billion.
Investors rewarded the company. Alphabet shares rose as much as 3% in after-hours trading. The company’s increased investment—$85 billion in capex, up from a $75 billion projection—didn’t scare investors. Instead, it excited them. Why? Because Google’s AI strategy is delivering results. With strong YouTube growth and booming cloud services, Alphabet is showing what smart spending looks like.
Alphabet Investors Cheer AI Bets Despite Regulatory Risks
Alphabet is doubling down on artificial intelligence, and investors are cheering. The tech giant raised its capital expenditure plans by $10 billion. That’s a bold move, especially as others pull back on spending. But Google’s AI products—like AI Overviews in Search and enhanced YouTube features—are showing real revenue traction.
That doesn’t mean everything is smooth. Alphabet is also facing a potential legal blow. A U.S. judge has ruled that Google violated antitrust law. Remedies could include ending its search exclusivity deals—or worse, selling off its Chrome browser. Still, Alphabet’s momentum is strong. Investors seem to believe that the AI upside outweighs the legal risks, at least for now.
Tesla Shares Tumble as Alphabet Soars: A Tale of Two Reports
Tesla and Alphabet gave investors two very different stories this earnings season. Tesla’s declining sales, missed targets, and political uncertainty sent its shares tumbling. Musk’s robotaxi dream and affordable car promise weren’t enough to stop the bleeding. Meanwhile, Alphabet exceeded expectations, grew cloud and ad revenues, and continued its AI push.
Investors responded accordingly. Tesla shares fell hard. Alphabet shares climbed. The market sent a clear message: execution and clarity matter more than hype. As Alphabet rides the AI wave, Tesla must prove it can rebound from policy shocks and cooling demand. For now, investors are placing their bets—and Alphabet is the safer play.