Tech giants tremble as Tesla and Alphabet disappoint the market.
Major Tech Earnings Taint Wall Street, Futures Hint at Lower Opening
Two big‑name technology companies have just released their quarterly numbers, sending a negative tone through the U.S. markets.
Key Points from the Earnings
- Apple Inc. posted a profit miss driven by supply‑chain hiccups and a dip in premium iPhone sales.
- Microsoft Corp. saw rising revenue but warned that cloud adoption will slow, dampening investor appetite.
- Both announcements have pulled the Dow Jones Industrial Average down, with futures now hovering below pre‑market highs.
Impact on European Stocks
LVMH, the French luxury powerhouse, also fell short of investor expectations, leaving a gloomy atmosphere in Paris that may spread across European exchanges.
What Tomorrow Looks Like for Traders
With the U.S. tech results and LVMH’s subdued performance flashing, market participants anticipate higher trading volume and a potentially weaker-than‑expected opening tomorrow.
Tech Titans Deliver Mixed After-Hours Results
In the extended trading session that followed Tuesday’s earnings release, Tesla experienced a significant drop, with its stock falling more than 7% as the company reported a disappointing second‑quarter performance. The automaker’s electric vehicle sales continued on a downward trend, further dampening investor enthusiasm.
Across the technology sector, Alphabet also saw a decline, with its shares slipping 2% after the firm missed expectations for YouTube advertising revenue. These earnings setbacks are creating a cautious atmosphere on Wall Street, and futures data suggest that the market could open lower on Wednesday.
Adding to the negative sentiment, LVMH failed to inspire confidence in European stocks, disappointing investors with its quarterly results. The ripple effect of these outcomes may influence broader market movements as investors reassess the outlook for technology and luxury brands alike.
Tesla faces growth bottlenecks in the EV markets
Tesla Q2 Financial Snapshot
Profitability and Revenue
Earnings per Share: $0.52 (€0.48) versus the forecasted $0.62. Total Revenue: $25.5 billion (€23.5 billion), marking a 2% increase from the prior year.
Core Automotive Segment
- Automotive sales decline: down 7% YoY, continuing a 2‑quarter trend.
- Vehicle deliveries: 443,956 units, a 4.8% drop YoY despite exceeding expectations.
- Profit margin pressure: adjusted margin fell to 14.4% from 18.7% in the same quarter a year earlier.
Regulatory Credits
Recorded a record $890 million (€820 million) in regulatory credits during Q2, which helped lift gross profit by 1% YoY.
Energy Generation & Storage
Revenue from energy generation and storage doubled, reaching $3 billion (€2.75 billion) in Q2, indicating a shift toward new growth arenas.
Strategic Developments
- Robotaxi delay: postponed from the original 8 August launch to 10 October.
- AI‑led initiatives: Robotaxi and Optimus humanoid robot plans to be manufactured at the Austin factory.
- Cybertruck outlook: projected to begin generating profit within the current financial year.
Market Reception
Shares have seen a 10% decline year‑to‑date after Tuesday’s market pullback, with investors demanding clearer progress in both AI projects and electric‑vehicle sales.
Alphabet tops earnings expectations but misses on YouTube ads
Alphabet Report Highlights Strong Growth in Q2
Revenue and Earnings
Alphabet’s second‑quarter revenue totaled $84.74 billion (≈€78.1 billion), reflecting a 14% increase year‑over‑year.
Earnings per share reached $1.89 (≈€1.74), beating analysts’ consensus of $1.84 (<€1.69).
Key Business Segments
- Google Cloud – $10.35 billion (≈€9.5 billion), up 28% from the prior quarter. The cloud division overtook the $10 billion mark for the first time, a milestone highlighted by CEO Sundar Pichai: “Our strong performance this quarter highlights ongoing strength in Search and momentum in Cloud.”
- Advertising – Total ad revenue hit $64.62 billion (≈€59.3 billion), an 11% rise over the same period last year.
- YouTube – Ad sales measured $8.66 billion (≈€7.98 billion), up 13% YoY but short of the projected $8.95 billion.
Strategic Outlook
Alphabet aims for a combined annual run rate exceeding $100 billion (≈€91.8 billion) for Google Cloud and YouTube by the close of 2024. Current figures suggest a potential shortfall in meeting this goal.
Capital Expenditure and AI Investment
Capital spending climbed to $13.2 billion (≈€12.2 billion), surpassing the expected €12.2 billion. CIO Ruth Porat noted “the tangible benefits of our AI capabilities, AI infrastructure, and generative AI solutions for cloud customers.”
Waymo Performance
- Revenue: $365 million (≈€336 million)
- Loss: $1.13 billion (≈€1.04 billion), exceeding the anticipated loss of $1.07 billion.
Porat discussed a new multi‑year commitment of $5 billion (≈€4.6 billion) to bolster Waymo’s growth.
Market Reception
Although the earnings surpassed forecasts, they fell short of the dramatic AI breakthrough investors had been anticipating. Nevertheless, Alphabet remains a top performer among the “Magnificent Seven” tech stocks, with its shares having risen 28% this year, largely fueled by the AI boom.
