Source: View source · u/aperartnft · reddit

The post

The past couple of weeks the market had been asking and concerning that the heavy AI capex may not be justified by earnings. Alphabet and Tesla, two of the largest AI-spending companies both released their earning reports on Wednesday. The answer turned out to be more interesting than a simple AI spending good or bad. Alphabet's revenue came in at $119.8 billion beating estimates of $116.93 billion and up 24% yoy. Google Cloud accelerated from 63% growth last quarter to 82% this quarter, hitting $24.8 billion in revenue. Cloud operating margin jumped from 20.7% a year ago to 35.6%. The Cloud backlog hit $514 billion up more than $50 billion in a single quarter. By almost any normal measure, that's one of the best quarters a company this size has ever posted. The stock still fell 6-7% anyway. Management raised 2026 capex guidance again, to as much as $205 billion on top of the $85 billion equity raise back in June. Investors were not happy with Alphabet saying that it's going to spend even more, on top of already spending an enormous amount with no assurance the return shows up on the same year. Tesla had a rough quarter. Revenue hit a record $28.24 billion, up 26% yoy and ahead of

Why it's worth your time

Cleanest numeric lay-down of the post-earnings paradox: Google Cloud growth accelerated to 82% ($24.8B rev, margin 20.7%->35.6%, backlog +$50B q/q to $514B) and the stock still fell 6-7% purely on the capex guide raised to $205B — the market pricing capex, not growth, extends the desk's Jul 22 Alphabet capex read with the reaction math attached.