Alphabet crushes Q2 earnings; Tesla misses on profit despite revenue beat

The second-quarter earnings season accelerated on Wednesday afternoon with a cluster of after-hours reports from major technology and semiconductor firms. The broader market had been subdued during regular hours: the Nasdaq shed 146 points (-0.57%) and the Russell 2000 slipped 27 points (-0.92%), setting a cautious backdrop for the evening disclosures.

Alphabet's earnings report was the standout, with the search leader and tech conglomerate posting earnings of $9.11 per share—far exceeding the consensus estimate of $2.87 and representing a +216% surprise. On a reported revenue basis, the company brought in $119.80 billion（約19兆円） (which does not deduct traffic acquisition costs); after adjusting for TAC, the effective top-line reached $103.62 billion（約17兆円）, surpassing the $101.28 billion（約16兆円） forecast. Cloud revenue demonstrated particularly strong momentum, growing +82%, with Search contributing $63.2 billion（約10兆円） and benefiting from +24.7% growth driven by AI in search query engagements. YouTube Ads, a key revenue stream, achieved $11 billion（約1.8兆円） in a single quarter for the first time. However, the earnings report also disclosed a sobering detail: Alphabet posted its first quarter of negative free cash flow, totaling -$5.8 billion（約9300億円）, on the back of $44 billion（約7兆円） in capital expenditures. This heavy infrastructure investment—driven by the need to support AI models and inference at scale—weighed on shares, which fell -1% in late trading despite the stellar earnings beat.

Tesla presented a contrasting picture, missing earnings expectations while posting solid revenue growth. The electric vehicle maker reported Q2 revenues of $28.26 billion（約4.5兆円）, up +26% year over year and above the $25.81 billion（約4.1兆円） forecast, but delivered earnings per share of $0.33 against the anticipated $0.50. Tesla also carries negative free cash flow, contributing to a -3% decline in after-hours trading that extended its year-to-date loss to -16.8%. IBM, meanwhile, navigated a middle ground, meeting bottom-line expectations with earnings of $2.93 per share and posting revenues of $17.2 billion（約2.8兆円）, which eked out a beat over the $17.17 billion（約2.7兆円） consensus. The company's Software division gained +5% in the quarter, with Red Hat—a key enterprise software asset—climbing +11%. IBM also signaled aggressive future investment in quantum computing. Shares rose +2% in after-market trading.

ServiceNow demonstrated the strength of enterprise software, posting a +19% earnings beat with $0.97 per share compared to the $0.86 estimate. Revenues of $3.99 billion（約6400億円） easily surpassed the $3.92 billion（約6300億円） consensus, and the company raised its subscriber revenue outlook for the full year—a meaningful forward signal. Shares climbed +3.66% in late trading, recouping some of the -37% year-to-date decline. Texas Instruments capped the afternoon with a solid performance, reporting earnings of $2.14 per share (+52% year over year) against expectations of $1.91, on revenues of $5.46 billion（約8700億円） (+23% year over year) that beat the $5.22 billion（約8400億円） forecast. The semiconductor firm retained $2.74 billion（約4400億円） in free cash flow, underscoring its ability to generate cash while investing for growth. Shares added +1% in late trading to reach +69.5% year to date, reflecting investor confidence in its profitability and capital returns.

The afternoon earnings sweep on July 22, 2026 revealed a bifurcated tech landscape: companies riding AI-driven revenue growth are simultaneously grappling with extraordinary capital demands. Alphabet's +216% earnings surprise and record YouTube advertising revenue ($11 billion（約1.8兆円）) underline the company's ability to monetize AI-enhanced search and advertising products. However, the company's first negative free cash flow quarter—-$5.8 billion（約9300億円）—and $44 billion（約7兆円） in capital expenditures signal that infrastructure investment to support AI inference and training is consuming cash faster than improved margins can replenish it. This dynamic explains why shares fell despite a massive earnings beat; the market appears to be pricing in a period of elevated capex-driven dilution.

Tesla's Q2 results illustrate a different stress point: revenue growth without proportional earnings gains. The 26% year-over-year revenue increase to $28.26 billion（約4.5兆円） fell short in earnings per share ($0.33 vs. $0.50 expected), suggesting margin compression in its core automotive and energy business. Combined with its own negative free cash flow and a -16.8% year-to-date stock decline, Tesla may be facing competitive or cost pressures that higher volumes cannot yet overcome. By contrast, Texas Instruments' +52% year-over-year earnings growth and IBM's software business resilience—driven partly by Red Hat's +11% gain—show that segments focused on semiconductor and enterprise software are capturing differentiated returns. ServiceNow's +19% earnings beat and full-year subscriber revenue guidance increase further underscore software's ability to drive both growth and profitability, even in an uncertain macro environment.

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