Russ Mould, investment director at AJ Bell (AJB.L), said: “Tesla’s headwinds are getting worse and investors are becoming less enamoured with the business.
“Competition is fierce, tariffs are biting, the end of tax credits for electric vehicle buyers in the US could hurt, Elon Musk’s political escapades have been a turn-off for many people, and product innovation has failed to make waves.”
“A push into more affordable vehicles implies a drop in profit margins, while the hope of being big in self-driving cars remains a fantasy rather than reality,” said Mould. “The Cybertruck product line hasn’t filled the treasure chest for the company, and for many the Tesla brand has become toxic because of Musk’s outspoken views.”
Tesla shares are already down nearly 18% year-to-date despite rising as CEO Elon Musk stepped back from Trump’s Department of Government Efficiency (DOGE) and said he planned to put more time back into the EV company.
Musk’s public feud with Trump, following his departure from Washington, has weighed on the stock.
Meanwhile, sales of Tesla vehicles have continued to fall, amid backlash against Musk’s political activities, with the company also facing increasing competition from rival EV makers.
In figures released early in July, Tesla delivered 384,122 vehicles globally in the second quarter, a drop of 13.5% for the same period last year.
Second-quarter results from Google-parent Alphabet (GOOG, GOOGL) topped Wall Street estimates, with revenue of $96.43bn versus expectations of $93.97bn. Earnings were $2.31 per share compared with a Bloomberg consensus estimate of $2.18.
On a business segment level, advertising revenue came in at $71.3bn versus expectations of $69.6bn. Search revenue topped out at $54.1bn versus an anticipated $52.7bn. YouTube ad revenue was $9.8bn versus expectations of $9.5bn.
Meanwhile, Google Cloud Platform revenue hit $13.6 billion, compared with analyst expectations of $13.1bn.
The company’s outlook for capital expenditures (capex), however, was higher than expected. The tech giant expects to spend $85bn in the year, $10bn more than had been previously expected.
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Ben Barringer, head of technology research at Quilter Cheviot, said: “Given the concerns around disruption from artificial intelligence and ChatGPT, Alphabet produced a really good set of numbers in its latest results. Revenues were up 15%, three percentage points better than expected and the search business delivered at the top of its range. The cloud business, meanwhile, was also a strong performer with revenues up 32% so it is encouraging to see the business growing strongly in the face of pressures.”
He said that the increase in its capex guidance “is a very solid raise and should be viewed as a positive, with investment looking to drive away the threat of Chat GPT”.
“Alphabet has been playing catch up somewhat in the AI arms race, but it is doing well to fend off the likes of Chat GPT,” said Barringer. “The big question will be whether it can keep innovating at a pace that allows it to maintain its search monopoly. This boost in investment suggests the fight will continue.”
He pointed out that the next big event on the horizon for Alphabet’s Google is a judge’s ruling in an search antitrust case. Judge Amit Mehta of the US District Court for the District of Columbia is expected to issue a ruling on “remedies” that follows the Justice Department’s victory against the company sometime next month.
“While it is unlikely to be the end of the saga regardless of the result, any indication that its search monopoly will weaken will not be taken well by the market, especially given the AI threat currently,” said Barringer. “This ruling has the potential to either be a clearing event or add to Alphabet’s uncertainties. Investors remain very much in wait and see mode as a result and will remain cool on the stock until that ruling makes it clear what the next steps are.”
Shares in Microsoft (MSFT) popped nearly 5% on Thursday, following the release of its results, seeing it become the second publicly-traded company ever to cross the $4tn market capitalisation mark.
Microsoft reported revenue of $76.4bn in the fourth quarter compared to expectations of $73.89bn, according to Bloomberg analyst consensus estimates. Adjusted earnings per share (EPS) came in at $3.65 compared to expectations of $3.37.
Microsoft’s Intelligent Cloud unit, which includes the Azure cloud, produced $29.88bn in revenue in the final quarter. For the entire fiscal year, this AI division saw revenue surge 34% to a record $75bn.
The company predicted its capital expenditure for the next fiscal year would top $100bn, a 14% increase from the year prior.
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It’s the fifth quarter in a row that Microsoft has beaten Wall Street’s expectations.
Barringer said that “while AI demand is clearly helping Microsoft, it isn’t the only game in town for the tech giant. Its cloud business, Azure, saw revenues grow 39%, well ahead of expectations, highlighting that demand for more traditional cloud based services remains strong. Microsoft has a good backlog in this business area too so we should see strong results continue to flow there.
“The company did announce it was slowing the growth of its capex and changing the mix slightly, but as demand remains strong for AI we will likely see the likes of data centres take priority for a number of years yet.
Facebook-parent Meta (META) surged 12% on Thursday after posting a bumper set of results after the market close on 30 July.
Meta said revenue for the three months to the end of June rose 22% from the same period last year to $47.5bn. Meanwhile, profits jumped by 36% to $18.3bn. Profit per share came in at $7.14, above analysts’ estimates.
The company said it expected its total expenses for 2025 to come in the range of $114bn and $118bn. The company added its AI initiatives will “result in a 2026 year-over-year expense growth rate that is above the 2025 expense growth.”
“I think there are all these questions that people have about what are going to be the timelines to get to really strong AI or superintelligence … we’ve observed the more aggressive assumptions, or the fastest assumptions, have been the ones that have most accurately predicted what would happen. I think that that just continued to happen over the course of this year too,” CEO Mark Zuckerberg said on a conference call with analysts.
Reality Labs logged an operating loss of $4.53bn while recording $370m in sales during the same period. This division oversees the Quest line of virtual reality headsets in addition to the Ray-Ban Meta smart glasses.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: “Meta has knocked it out of the park. Pick your metric and Meta crushed it, from ad revenue growth to daily users, all the way down to the profit lines.
“AI is clearly delivering real-world benefits for advertisers, and they’re willing to pay more as a result. Average price per ad was up 9% over the quarter, a clear indication that Meta is delivering an improved product for both users and advertisers.
“The broader focus now turns to Meta’s mammoth AI investment plans and whether it can continue to manage those costs without hurting earnings or free cash flow.
“CFO commentary called out higher costs next year, and another year of similar capex growth, which many analysts did not have on their bingo cards. Clearly, all this spending adds some near-term risks to the bottom line, but Meta looks set to be a clear winner in the AI space over the longer term.”
Investors in Apple (AAPL) had a muted response to its latest earnings in after-hours trading following their release, despite a surge in iPhone sales driving record revenue at the Cupertino-based company.
The company posted better-than-expected 10% growth in revenue year-on-year for the quarter to the end of June and an upbeat forecast.
Earnings of $1.57 per share topped the Bloomberg consensus estimate of $1.43. Revenue of $94.04bn was better than the expected $89.30bn. Mac and iPhone revenue were both better than analysts had anticipated, while wearables and iPad numbers fell short. Greater China revenue was $15.37bn compared to an estimate of $15.19bn.
Apple expects tariffs to cost the company $1.1bn this quarter, CEO Tim Cook told investors on the earnings call. That’s after the iPhone maker took a tariff-related hit to the tune of $800m during the fiscal third quarter which ran through June.
Services revenue, which includes the App Store, iCloud and Apple Pay, came in at $27.4bn, up about 13% year-on-year, continuing its double-digit growth.
Cook said Apple (AAPL) was increasing its AI investments. “We did during the June quarter, we will again in the September quarter,” he told analysts, without giving specific numbers.
Hargreaves Lansdown’s Britzman said: “Apple is caught in a sentiment trap. On paper, the company delivered one of its strongest sets of results in recent years – robust iPhone sales, a return to growth in China, and encouraging guidance. Ordinarily, that would send shares meaningfully higher. There’s a sense of unease hanging over Apple, something we haven’t seen in a long time. Scepticism around its AI positioning, combined with lingering tariff uncertainty, continues to weigh on investor confidence.”
“Apple should be a leading name in AI hardware, but that’s simply not the case,” he added. “Apple Intelligence was a flop, so a lot of hope now lies in an AI-powered Siri – but that might not come until next year. Brand loyalty gives Apple time to get the AI transition right, but it needs to start delivering.”
Shares in Amazon (AMZN) fell on the back of its second quarter results, as its outlook for operating income fell short of investor expectations.
The tech company beat estimates with its revenue up 13.3% year over year to $167.7bn. Market experts had estimated the company would report around $162bn in revenue and 9% growth. The company’s Amazon Web Services cloud computing division reported its sales reached $30.9bn in an increase of 17.5% year over year.
However, Amazon projected that operating income in the third quarter would be $15.5bn-$20.5bn, which fell short of analyst expectations of $19.4bn.
Chief executive Andy Jassy warned of further uncertainty around Trump’s tariff policies and said he remained unsure who would absorb potentially higher costs over time.
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He also gave a clear indication that the e-commerce giant will continue its AI push. “AI is going to be the biggest transformation of our lifetime,” he said during a call with analysts on Thursday. “Every single area of the way we work is likely going to be impacted in some meaningful way by AI.”
Dan Coatsworth, investment analyst at AJ Bell (AJB.L), said: “Just as it looked as if investors were ready to go all-in to big tech again, Amazon has come along and spoiled the party. A negative reaction to its results and a lacklustre response to Apple’s numbers would suggest the market has become more discerning.”
“It is spending big on AI infrastructure, leading to more subdued profit guidance than expected,” he said. “The retail side of its business is caught up in Trump’s spiderweb of tariffs, which creates ongoing uncertainty.”
“Competition remains fierce for cloud computing services and Amazon’s sales growth rate is struggling to match rivals Microsoft and Alphabet,” Coatsworth added.
As an enabler of the AI boom, chipmaker Nvidia’s (NVDA) earnings have become a major event in the earnings calendar. Investor expectations have become increasingly high around the company’s results, with markets sensitive to any signs of slowdown for the chip giant.
Shares fell following the release of its second-quarter results, despite the company beating estimates on the top and bottom lines.
Revenue for the quarter came in at $46.7bn compared to expectations of $46.2bn and adjusted earnings of $1.05 per share, which were also ahead of forecasts of $1.01.
However, data centre revenue of $41.1bn was just below estimates of $41.3bn, according to data from Bloomberg.
For the third quarter, Nvidia projected revenue of $54bn plus or -2%; expectations were for $53.4bn. The company said its projections didn’t include sales of its H20 chips. The Trump administration recently reached a deal with the company, allowing it to sell the chip in China in exchange for 15% of that revenue going to the US government.
Speaking to Yahoo Finance following the release of the results after the bell on Wednesday, Nvidia CEO Jensen Huang said that it’s the president’s “policy to have America win the AI race”.
Ben Barringer, head of technology research at Quilter Cheviot, said: “Nvidia’s results were straight down the middle, solid, but not the blockbuster beat some investors are used to. It’s beating sell-side consensus, but it’s bang in line with buy-side expectations.”
“While China represented around 13% of Nvidia’s revenue in 2024, many investors now treat it as an optional add-back rather than a core part of the forecast,” he said. “The broader AI story remains compelling. Hyperscaler CAPEX is expected to grow 50% this year and 15% next year, and we’re seeing growing momentum from sovereigns, enterprises, agentic AI, and physical AI applications like robotics and autonomous systems. These trends show Nvidia’s demand base is still expanding.”
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