Alphabet and Tesla both reported negative free cash flow in their latest quarterly results, putting pressure on their shares even as several companies supplying artificial intelligence infrastructure posted strong gains.

Google parent Alphabet reported revenue of $119.8 billion for the second quarter of 2026, a 23% increase from a year earlier. Its cloud business grew 82%. Despite that revenue growth, Alphabet’s stock fell about 8%, erasing roughly $330 billion in market value.

The main concern was cash generation. Free cash flow is closely watched because it measures cash left after operating expenses and capital spending, making it a key gauge of how much flexibility a company has to fund investment, buybacks, or other uses without relying on outside financing. Alphabet spent $45 billion in the quarter, including $27 billion on servers and $18 billion on data centers. The spending pushed free cash flow to negative $5.9 billion, marking the first time the measure has turned negative since Alphabet went public in 2004.

Alphabet now expects to spend up to $205 billion this year, an increase of $15 billion from its estimate three months earlier. Management declined to provide a spending ceiling for 2027, leaving investors with limited visibility on when the current AI infrastructure build-out might translate into stronger cash generation.

Tesla faced a different set of results. The company’s revenue beat expectations, but earnings missed sharply. Operating margin declined to 1.4% from 4.1% a year earlier, while free cash flow came in at negative $1.1 billion.

Tesla said it expects to spend up to $25 billion this year, more than double its 2024 capital expenditure. The company’s CFO said spending would likely rise further over the next three years. Tesla shares dropped 18% for the week, wiping out roughly $250 billion in market value and marking the stock’s worst week since 2022.

AI Infrastructure Suppliers Rise

While Alphabet and Tesla were penalized after reporting heavy spending and negative free cash flow, several AI infrastructure suppliers advanced. The contrast highlights a split inside the AI trade: companies buying servers, chips, and data center capacity are absorbing large upfront costs, while some suppliers are benefiting directly from that spending through orders, leasing demand, and infrastructure revenue.

Supermicro, which builds AI servers, rose 25% after reporting more than $60 billion in new orders in a single quarter. Digital Realty, a data center landlord, gained nearly 15% on a record leasing backlog.

Nvidia also moved higher, rising around 2% and adding approximately $100 billion in market value.

Across the week, a basket of AI suppliers gained an average of 11%. By contrast, the five largest AI spenders — Alphabet, Microsoft, Amazon, Meta, and Tesla — declined an average of 9%.

Broader Market Impact

The Magnificent Seven lost around $880 billion in market value during the week. The rest of the S&P 500 gained about $165 billion, leaving the index close to flat for the week.

Chip stocks remained nearly 20% below their June record, despite a partial recovery to the 12,000 level on the PHLX Semiconductor Index.

Microsoft, Meta, Amazon, and Apple are scheduled to report next week. Microsoft is 29% below its all-time high, Meta is down 25%, and Amazon is down 16%.

Apple has been an exception among the group. The company does not have a large AI build-out to defend and recently closed at a record high.

Investors are focused on whether upcoming earnings reports from other major technology companies will draw a similar reaction to Alphabet’s, particularly on capital spending. The reports will also give investors more data on whether AI-related spending pressure is concentrated in a few companies or becoming a broader issue across the largest technology platforms.