Artificial intelligence is the defining theme of the latest global technology earnings season, but investor reactions varied sharply as spending priorities and profitability diverged across the sector. Here's a roundup of the four technology giants and their Q2 earnings.
Alphabet
Alphabet slipped about 3% in after-hours trading despite reporting stronger-than-expected revenue, as investors focused on another increase in capital expenditure guidance. Revenue climbed 24% year-on-year to $119.8 billion, beating estimates of $116.9 billion, while Google Cloud revenue surged 82% to a record $24.77 billion.
However, adjusted earnings per share of $2.85 narrowly missed expectations, and the company raised its capital spending outlook to $195-205 billion, up from $180-190 billion, raising concerns over the pace of AI infrastructure investments.
ServiceNow
ServiceNow emerged as the biggest winner, with shares rising 5% after the bell after delivering another AI-driven beat. Total revenue increased 24% to $3.99 billion, ahead of expectations, while subscription revenue exceeded the upper end of the company's own guidance.
Management said its AI business crossed $1 billion in annual contract value (ACV) and raised full-year subscription revenue guidance, reversing investor concerns that had pushed the stock down nearly 18% following its previous quarterly outlook.
IBM
The picture was less encouraging at IBM, whose shares traded largely flat after the company missed both revenue and earnings expectations. Revenue came in at $17.2 billion, below estimates of $17.86 billion, while adjusted EPS also fell short.
IBM cut its full-year revenue growth outlook to 4%-5% from more than 5%, saying customers delayed software purchases and redirected spending toward AI servers, storage and memory. Infrastructure revenue also declined as demand for mainframes weakened.
Tesla
Tesla, meanwhile, fell 4% in after-hours trading despite reporting better-than-expected revenue. The electric vehicle maker posted 26% revenue growth to $28.24 billion, but non-GAAP EPS of $0.33 missed estimates by a wide margin.
Gross margin slipped to 16.8%, well below expectations of 19.4%, even as deliveries rose 25% year-on-year to a record 480,126 vehicles for a second quarter.
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