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

SpaceX Capex Outstrips Revenue

Filing for an IPO, SpaceX said it generated revenue of 18.7 billion US dollars in 2025, up 33% year-on-year. Connectivity revenue rose almost 50% to 11.4 billion dollars. Space revenues were up just 7.6% to 4.1 billion dollars.

Capital spending climbed 86% to 20.7 billion dollars, as SpaceX ramped up investments in AI infrastructure.

In May 2026, SpaceX entered into cloud services agreements with Anthropic, an AI research and development public benefit corporation, to access compute capacity across SpaceX's COLOSSUS and COLOSSUS II data centres. It said Anthropic has agreed to pay 1.25 billion dollars per month through May 2029, with capacity ramping in May and June 2026 at a reduced fee. Source: SpaceX IPO prospectus

Apollo Go More than Doubles Rides

In the first quarter of 2026, Apollo Go, Baidu's self-driving ride-hailing service, "delivered 3.2 million fully driverless operational rides, with weekly rides peaking at over 350,000 in March."  Total rides were up by more than 120% year-over-year.  By way of comparison, Waymo says it is delivering 500,000 "fully autonomous" rides per week.

In Europe, Apollo Go said it is on track to commence open-road testing in Switzerland, and expects to begin testing in London with Uber and Lyft soon. In the Middle East, Apollo Go's fully driverless operations are running across multiple zones in Dubai, following the launch of the Apollo Go app in March.

Apollo Go says its fleets have accumulated more than 220 million fully driverless autonomous kilometres. Source: Baidu statement

Capital Spending by the Magnificent Seven

 

An AI arms race is sparking a massive surge in capital spending by the major cloud service providers.

Deutsche Telekom Sees Steady Growth

Deutsche Telekom reported a 4.7% year-on-year rise in revenue in organic terms for the first quarter to 29.9 billion euros, propelled by a 6.1% rise in revenues in the US. In Germany, revenues rose 2.1%.

The telco said that more than 13 million homes in Germany can now directly connect to its fiber-optic network, while the number of homes taking out a FTTH (fibre-to-the-home) contract has now reached 2.2 million - the penetration rate has climbed from 15.5% to 17.1% over the past 12 months.

T-Mobile US reported a 6% year-on-year increase in the number of postpaid accounts to 34.4 million at the end of March 2026.  The operator defines a postpaid account as a billing account which is used to bundle multiple contracted services, such as mobile communications, 5G internet, and fiber-optic lines, as well as various connected devices including smartphones, tablets, hotspots, and wearables. For the 2026 full year, T-Mobile US expects postpaid net account additions of between 950,000 and 1,050,000, up from the 900,000 to 1,000,000 anticipated at the start of the year. Source: Deutsche Telekom statements

Bumper Quarter for the iPhone

Apple reported a 17% year-on-year increase in revenues for the quarter ending March 28th to 111.2 billion US dollars, driven by a 22% leap in iPhone revenues and a 16% rise in services revenues. However, Apple's R&D spending rose 32% year-on-year to 11.4 billion dollars.

Apple said it expects total revenue to rise between 14% and 17% in the current quarter, despite supply constraints. Source: Apple statements

Alphabet Even More Bullish on AI

Alphabet reported a 19% year-on-year increase in revenue in constant currencies for the first quarter of 2026 to 110 billion US dollars. Cloud revenues were up 63% to 20 billion dollars, driven by strong demand for AI models, such as Gemini 3, and AI infrastructure "due to continued deployment of TPUs and GPUs."

Alphabet also said its revenue backlog nearly doubled quarter-on-quarter to more than 460 billion dollars, with the majority related to Google Cloud Platform agreements. Just over half of the backlog will convert to revenue in the next 24 months, the company said, with TPU hardware sales beginning to come through as revenue later in 2026, with more in 2027. 

Alphabet said its AI model Lyria 3 has generated more than 150 million songs since launching on the Gemini App in mid February, while Nano Banana 2 has created one billion images in nearly half the time of Nano Banana 1. Alphabet reported it now serves 350 million paid subscriptions, with YouTube and Google One being the key drivers.

The company raised its full year capital spending guidance by five billion dollars to 180 billion to 190 billion dollars, following the recent acquisition of Intersect, which provides data centre and energy infrastructure.

Noting that its strong results "reinforce its conviction" to invest to capture the AI opportunity, Alphabet said it expects its 2027 capex to be significantly higher than in 2026. 

Alphabet's self-driving unit, Waymo, is now operating in 11 US cities and is delivering 500,000 "fully autonomous" rides per week, doubling in less than a year. The company's Wing drone delivery service "continues to expand across the US in partnership with Walmart and Doordash." Source: Alphabet earnings.