US stocks suffered a ‘black Thursday’, with the seven tech giants losing nearly 800 billion dollars, about 5.8 trillion yuan, their worst single day since April last year. The two weakest were Google, down almost 7 per cent, and Tesla, down 15 per cent, and the trigger sat inside the cash flow statement.
The numbers
Both companies turned free cash flow negative for the first time. Google’s was minus 5.9 billion dollars, its first negative since the 2004 IPO. Tesla’s was minus 1.1 billion, its first in about two years. The driver is capital expenditure: Google’s second-quarter capex doubled to 44.9 billion dollars, nearly 5 billion a day, while Tesla’s rose 142 per cent to 5.8 billion. Google cloud still grew 82 per cent to 24.8 billion dollars and search 17 per cent, but the spend outran the cash the businesses generate.
Spending faster than earning
Neither plans to slow down. Google raised 2026 capex guidance to 195 to 205 billion dollars, and Tesla lifted its target to 25 billion from 8.5 billion last year, aimed at AI compute, humanoid production lines, RoboTaxi expansion and factories. Tesla’s revenue rose 26 per cent to 28.2 billion dollars but net income fell 5 per cent to 1.1 billion, with the car business still 72 per cent of revenue and robot mass production delayed. Rating agencies warn that US accounting lets undelivered hardware and unopened data centres sit off the books; the five cloud and model giants’ shadow debt reached 1.65 trillion dollars. Markets now ask the question no chief executive answers: what is the return on all this AI spending?
Read the original report (Sohu IT)
Translated and adapted from Sohu IT (it.sohu.com).