Alphabet Flags Big Leap in AI Investment

Alphabet reported a 23% year-on-year increase in revenues to 120 billion dollars at constant currencies for the second quarter, boosted by an uplift of 82% in cloud revenue driven by strong demand for AI infrastructure and AI solutions. It also reported a "cloud backlog" of 514 billion dollars.

Alphabet said its model APIs are now processing approximately 22 billion tokens per minute, up from 16 billion just a quarter ago. Over the past 12 months, more than 2,000 enterprises consumed over 100 billion tokens, the company added.

In the Other Bets division, which includes the Waymo self-driving unit, revenues rose only marginally to 382 million dollars (compared with 373 million), and the operating loss was 1.8 billion dollars, up from 1.25 billion dollars. 

Alphabet also said it now plans to invest between 195 billion and 205 billion dollars in capex in 2026, up from its previous estimate of between 180 billion and 190 billion, as it anticipates further growth in demand for AI. Source: Alphabet statements

Robotaxi Reverse and Robust Revenue For Tesla

Tesla reported a 26% year-on-year rise in revenues for the second quarter to 28.2 billion US dollars, lifted by a 23% rise in automotive revenues to 20.5 billion dollars. However, a graphic Tesla provided (shown above) suggests its new robotaxi business provided fewer paid rides in the quarter than in previous quarters.

Energy generation and storage revenues rose 13%, thanks to "record energy storage deployments in EMEA, supported by record deployments from Megafactory Shanghai." 

Capital expenditure for the quarter rose 142% year-on-year to 5.8 billion dollars. Tesla said it has started production of Cybercab, its purpose-built autonomous vehicle, which is designed to be the workhorse of its robotaxi fleet. Engineering test drives of production Cybercabs on public roads also began during the quarter. 

The company added that its Tesla Semi truck and Megapack 3, a new energy storage system, remain on schedule for production starting in 2026. First-generation production lines for Optimus (its humanoid robot) are being installed in anticipation of production in 2026.  Source: Tesla earnings report