Big Tech Earnings: Alphabet Blowout, Tesla Miss, IBM & ServiceNow Surge

TL;DR

• Alphabet beat on revenue ($119.8B, +24% YoY) with Google Cloud surging 82%, but raised 2026 capex to $195–$205B, spooking investors — stock fell 4.0% after hours
• Tesla posted record revenue ($28.2B) and deliveries (480K), but EPS missed by 35% ($0.33 vs $0.53 expected) as operating margin collapsed to 1.4% and regulatory credits evaporated — stock tumbled 6.2%
• IBM delivered a modest beat against last week's sharply lowered bar, with software up 5% but consulting flat; full-year guidance trimmed to 4–5% constant-currency growth — stock rose 2.4% but remains down 30% YTD
• ServiceNow was the standout: subscription revenue up 24.5% to $3.1B, AI ACV crossed $1B (first enterprise SaaS to hit that mark), and full-year guidance raised for the second straight quarter — stock gained 4.6%

Alphabet (GOOGL): Cloud Revenue Explodes 82%, But Capex Spooks the Market

The Numbers

The Story

Alphabet delivered what should have been a triumphant quarter. Revenue grew 24% year-over-year to $119.8 billion. Google Cloud revenue surged 82% to $24.77 billion, cementing its position as the fastest-growing hyperscale cloud. The Gemini app now counts 950 million monthly active users, processing 22 billion API tokens per minute. YouTube advertising rose 13%, and the FIFA World Cup drove search queries to an all-time high.

Yet the stock fell approximately 4% in after-hours trading.

Why the sell-off? The company raised its full-year 2026 capex guidance to $195–$205 billion, up from $180–$190 billion last quarter and well above the ~$188 billion analysts expected. CFO Anat Ashkenazi told analysts the company remains in a "supply-constrained environment" and plans to use third-party cloud capacity as a "bridging strategy" in Q3 — a move that will create "modest margin pressure in the near term."

The capex trajectory is staggering. Q2 capex of $44.9 billion was double the year-ago period. About 60% went to servers, 40% to data centres and networking. Free cash flow has already been compressed — Q1 FCF fell 47% year-over-year — and the new guidance signals more pressure ahead.

The bull case: Google Cloud's backlog reached approximately $462 billion last quarter, with over half expected to convert to revenue within 24 months. 75% of Google Cloud customers are using AI products. The company doubled both new-customer acquisition and deals in the $100 million–$1 billion range. CEO Sundar Pichai confirmed the company is already investing compute into Gemini 4, calling it a "very ambitious effort."

The bear case: As SemiAnalysis CEO Dylan Patel noted in April, Google's free cash flow could approach zero next year if the spending path holds. The $84.75 billion equity raise in June — including a $10 billion private placement with Berkshire Hathaway — underscores the scale of the capital call.

Other notable disclosures:

• "Other income" of $97.98 billion included a $99.03 billion gain on equity securities (Anthropic, SpaceX stakes)
• Antigravity AI coding tool: 2.4 million weekly active users
• Waymo/Other Bets revenue: $382 million (+2.4% YoY)
• Q3 search revenue may face tougher comparisons as it laps an acceleration that began in Q3 2025
• CoreWeave and Nebius shares jumped 4–5% after-hours on Alphabet's plan to consume more third-party compute

Stock reaction: GOOGL fell ~4% after hours. The cloud beat was overshadowed by the capex hike.

Tesla (TSLA): Record Revenue, Profit Collapse

The Numbers

The Story

Tesla posted its best-ever quarter for deliveries (480,126 vehicles, +25% YoY) and record revenue of $28.24 billion — its first real top-line growth in over a year and enough to push trailing-twelve-month revenue past $100 billion for the first time. But almost none of it reached the bottom line.

Adjusted EPS of $0.33 missed consensus by 35%. Operating income collapsed 57% to $398 million. Operating margin shrank to 1.4% from 4.1% a year ago. Free cash flow turned negative for the first time since early 2024.

Three forces drove the profit miss:

1. Regulatory credit collapse. Credit revenue fell 67% year-over-year to just $146 million — the lowest in years. The $7,500 federal EV tax credit expired on 30 September 2025, and a change in federal law zeroed out the penalties automakers paid for missing fuel-economy standards. This line item, which peaked at $2.76 billion in 2024, is not coming back.

2. Operating expense explosion. OpEx jumped 47% to $4.35 billion as Tesla poured money into AI, the Optimus humanoid robot, robotaxi infrastructure, and stock-based compensation tied to the 2025 CEO pay package.

3. Capex doubled. Capital spending surged 142% to $5.79 billion. CFO Vaibhav Taneja had previously guided to over $25 billion in full-year capex.

The strategic pivot: Elon Musk has shifted Tesla's centre of gravity away from vehicle sales toward robotaxis, Cybercab production, and Optimus manufacturing. The company confirmed:

• First-generation Optimus production lines are being installed, with output planned for 2026
• Cybercab production has begun at Gigafactory Texas
• Robotaxi service now operates in seven US metro areas
• Active FSD subscriptions reached 1.48 million (+56% YoY)
• Over 55% of new North American deliveries included FSD subscriptions

Musk acknowledged on the call that Optimus will be "the hardest product to scale manufacturing that we've ever made at Tesla, because everything on the robot is new" with "no existing supply chain."

Stock reaction: TSLA fell ~3–4% in after-hours trading. The stock is down 17% year-to-date.

IBM: The Comeback After the Crash

The Numbers

The Story

IBM's Q2 results landed in the shadow of the most dramatic event in its recent history. One week earlier, the company issued a preliminary earnings warning that triggered a 25% single-day stock crash — its sharpest on record. CEO Arvind Krishna cited worse-than-planned performance in Z mainframe sales (down 42% YoY) and transaction processing software, as organisations had rushed to buy hardware ahead of expected price increases, pulling demand forward.

Wednesday's full results confirmed the preliminary numbers and delivered a modest beat against the sharply lowered bar. Software — IBM's high-margin growth engine — rose 5% to $7.76 billion. Consulting was flat at $5.33 billion. Infrastructure fell 7%, dragged down by the mainframe cycle.

The outlook: IBM lowered its full-year constant-currency revenue growth forecast to 4–5%, down from the "over 5%" guidance issued in April. Free cash flow is still expected to increase by approximately $1 billion year-over-year. The board declared a quarterly dividend of $1.69 per share.

Strategic moves:

• Signed a letter of intent to build a US quantum chip foundry
• Launched "Bob," an AI coding tool using a mixture of generative models, adopted by over 80,000 employees
• Targeting ~1 percentage point expansion in full-year pre-tax margin through AI-driven productivity

Stock reaction: IBM shares rose 2.4% in after-hours trading to ~$211. The stock remains down 30% year-to-date.

ServiceNow (NOW): AI Demand Drives Another Guidance Raise

The Numbers

The Story

ServiceNow continued its run as one of the best-executing enterprise software companies in the world. Subscription revenue grew 24.5% year-over-year to $3.877 billion, beating the high end of guidance. The company raised its full-year subscription revenue forecast for the second consecutive quarter, citing accelerating AI-driven demand.

Key highlights:

• AI ACV surpassed $1 billion, making it one of the fastest-growing AI revenue streams in enterprise software
• Cybersecurity revenue became the fastest-growing segment among the company's top 10 product lines
• Record large-deal activity, with the company now operating in nearly every US state through expanded government contracts
• ServiceNow acquired a 5% stake in Indian software firm BusinessNext, valuing it at $700 million

CEO Bill McDermott told CNBC the company has built a "kill switch" mechanism for AI agents, addressing enterprise concerns about autonomous AI systems operating without human oversight — a disclosure that resonated with risk-conscious enterprise buyers.

Stock reaction: NOW shares rose approximately 4.6% in after-hours trading. The stock had fallen 6.5% during the regular session ahead of results, reflecting broader tech sector anxiety.

The Bigger Picture: What These Four Reports Tell Us

Taken together, these four earnings reports paint a coherent picture of where Big Tech stands in mid-2026:

1. AI infrastructure spending is the defining capital allocation question of this cycle. Alphabet's $195–$205 billion capex plan, Tesla's $25 billion-plus spend, and the broader hyperscaler buildout (Bloomberg estimates US tech companies could spend $725 billion this year) represent an industrial-scale bet that AI demand will justify the outlay. Investors are increasingly demanding proof, not promises.

2. The revenue is arriving — unevenly. Google Cloud's 82% growth and ServiceNow's AI ACV crossing $1 billion show that enterprise AI demand is real and monetisable. But Tesla's experience shows that spending on AI without a clear near-term monetisation path (Optimus, robotaxi) tests investor patience.

3. Legacy tech is being repriced in real time. IBM's 25% single-day crash on a mainframe cycle miss — in a quarter where software still grew 5% — shows how little tolerance the market has for surprises in the old-guard tech names, even as their AI transformations progress.

4. The earnings quality divergence matters. Alphabet's headline $9.11 EPS was flattered by $99 billion in paper gains on equity stakes. Tesla's $1.11 billion GAAP net income leaned on $590 million in "other income." ServiceNow's subscription revenue growth is cleaner. Investors are learning to read beneath the headlines.

Sources: CNBC, Reuters, Electrek, Benzinga, Seeking Alpha, MarketWatch, Financial Times, TechBooky, Quartz, Alphabet IR, Tesla IR, IBM IR, ServiceNow Newsroom. All data as of after-market close, 22 July 2026.