U.S. tech earnings season just opened, and Tesla, Alphabet, and IBM fired the first shots

U.S. tech earnings season just opened, and Tesla, Alphabet, and IBM fired the first shots. The numbers, reported Wednesday and compiled by LSEG, show a shaky start for one, confident bets from another, and unexpected strength from the third. Together, they set the tone for the rest of the week, as investors dig through every line looking for direction. Tesla came in first, and the news wasn’t great. The company said its automotive revenue dropped 16% from the same period last year. Sales fell for the second quarter in a row, and again came in lower than Wall Street estimates. Adjusted earnings per share landed at 40 cents, just under the 43 cents analysts were expecting. Total revenue hit $22.50 billion, short of the $22.74 billion forecast. Tesla’s numbers weaken as political fallout hits sales Auto revenue for the second quarter came in at $16.7 billion, down from $19.9 billion a year earlier. Tesla also saw a sharp cut in revenue from selling auto regulatory credits, pulling in $439 million, compared to $890 million the year before. Earlier this month, the company had already reported a 14% decline in vehicle deliveries year-over-year, totaling 384,000 for Q2. Those deliveries aren’t clearly defined, but they’re the closest thing Tesla reports to electric vehicle sales. The company’s net income dropped to $1.17 billion, or 33 cents per share, down from $1.4 billion, or 40 cents, last year. But the numbers are only part of the story. The company has been facing major backlash in both the U.S. and Europe. At the center of it is Elon Musk, who’s been heavily involved in politics this year. Musk donated large amounts to support President Donald Trump’s reelection, endorsed Germany’s far-right AfD party, and then joined Trump’s administration to lead the new Department of Government Efficiency (DOGE). At DOGE, Musk helped eliminate USAID, slash parts of the federal workforce, and roll back major regulations. The response from consumers hasn’t been kind. In a note to shareholders, Tesla also said it had started “first builds” of a cheaper model in June, with plans to ramp up production in the second half of 2025. Alphabet beats revenue targets, raises AI investments Alphabet reported second-quarter results that topped Wall Street expectations. Revenue for the quarter reached $96.43 billion, beating the $94 billion analysts were looking for. Adjusted earnings came in at $2.31 per share, compared to the $2.18 forecast. Its major business lines all delivered higher numbers. YouTube ads brought in $9.8 billion, above the $9.56 billion estimate. Google Cloud posted $13.62 billion, beating the expected $13.11 billion. Traffic acquisition costs hit $14.71 billion, slightly above the $14.18 billion prediction. Overall revenue grew by 14% year-over-year, better than the 10.9% Wall Street expected. But the big headline came from the company’s capital spending plans. In February, Alphabet had said it would invest $75 billion in 2025 to grow its AI efforts — already way above the $58.84 billion analysts had in mind. On Wednesday, that number was bumped up again to $85 billion. The company said the increase was due to “strong and growing demand for our Cloud products and services.” Alphabet’s search division brought in $54.19 billion for the quarter. Its ad revenue climbed to $71.34 billion, up 10.4% from last year’s $64.61 billion. After the report, Alphabet shares edged slightly higher in after-hours trading. IBM tops estimates but slips in after-hours trading IBM wrapped up the tech trio, reporting stronger-than-expected earnings but still watching its stock slide 5% in extended trading. Adjusted earnings per share came in at $2.80, beating the $2.64 Wall Street was expecting. Revenue hit $16.98 billion, topping the $16.59 billion estimate. That figure was nearly 8% higher than the same quarter last year. In Q1, IBM’s revenue growth was below 1%, so this marks a sharp turnaround. Net income rose to $2.19 billion, or $2.31 per share, compared to $1.83 billion, or $1.96 per share, last year. The software division posted $7.39 billion in revenue, just below the $7.43 billion estimate. Hybrid cloud services — including Red Hat — grew by 16%. Gross margin in the software unit was 83.9%, only slightly under the 84% Wall Street was looking for. Revenue from consulting came in at $5.31 billion, beating the expected $5.16 billion. Infrastructure services pulled in $4.14 billion, above the $3.75 billion estimate, a 14% increase from a year ago. During the quarter, IBM also launched the z17 mainframe and announced the acquisition of Hakkoda, a consulting firm focused on data and artificial intelligence. In terms of outlook, the company reaffirmed its plan to generate over $13.5 billion in free cash flow in 2025, sticking close to projections it made in April. It still expects at least 5% revenue growth at constant currency. As of the close on Wednesday, IBM shares had gained 28% so far in 2025, well ahead of the S&P 500’s 8% gain in the same time frame. Cryptopolitan Academy: Want to grow your money in 2025? Learn how to do it with DeFi in our upcoming webclass. Save Your Spot