Five of the technology sector’s most closely watched companies reported earnings after Wednesday’s closing bell, offering a concentrated look at how the artificial-intelligence investment boom is moving through the economy. Alphabet and ServiceNow translated AI demand into sharply higher cloud and software sales. Texas Instruments said chip demand was broadening beyond data centers. Tesla’s record second-quarter vehicle deliveries came with a thinner operating margin, while IBM cut its growth outlook after clients redirected budgets toward hardware.
The results were not a single verdict on AI. They showed a chain of spending: Alphabet is buying more servers and data-center capacity; ServiceNow is selling AI software into corporate workflows; Texas Instruments is gaining content in power-hungry data centers; and Tesla is funding autonomy, robotics and its own computing infrastructure. IBM, meanwhile, said some customers deferred enterprise software agreements while they bought infrastructure before expected price increases.
Here is what each company reported, what executives emphasized on their conference calls and what investors will be watching next.
Alphabet: cloud growth came with a bigger capital bill
Alphabet reported second-quarter revenue of $119.8 billion, up 24% from a year earlier. Google Services revenue rose 15% to $94.5 billion, including a 17% increase in Search revenue and a 13% rise in YouTube advertising. Google Cloud was the standout: revenue jumped 82% to $24.8 billion, operating income reached $8.8 billion and backlog climbed to $514 billion.
On the call, management raised its 2026 capital-spending forecast to $195 billion to $205 billion from $180 billion to $190 billion. Roughly 60% is expected to go to servers and 40% to data centers and networking. Executives said demand remains constrained by available capacity, so Alphabet is also using third-party infrastructure as a bridge. Gemini had about 950 million monthly active users, its APIs were processing 22 billion tokens a minute, and nearly 90% of the Fortune 100 used Gemini Enterprise.
The trade-off was visible immediately. Alphabet’s operating income grew 30% to $40.8 billion, but shares slipped in after-hours trading as investors weighed the higher spending plan and management’s expectation that 2027 capital expenditures will rise significantly again. Reported net income was also inflated by large equity-investment gains, mostly tied to SpaceX’s public-market debut, making operating results the cleaner measure of the quarter.
Tesla: record deliveries did not prevent margin compression
Tesla’s shareholder update showed revenue of $28.24 billion, up 26%, after the company delivered a record 480,126 vehicles in the quarter. Yet operating income fell 57% to $398 million and operating margin narrowed to 1.4% from 4.1% a year earlier. Adjusted earnings were 33 cents a share, below Wall Street’s consensus, and free cash flow was negative $1.09 billion as capital expenditures more than doubled to $5.79 billion.
The Q&A focused on the widening gap between Tesla’s current automotive economics and its AI-heavy future. Research and development spending rose 49% to $2.37 billion. Management pointed to production starting for Cybercab in Texas, robotaxi service operating in seven major U.S. metro areas, construction of Optimus production lines in Fremont and Austin, and work on a semiconductor fabrication plant in Austin. It also identified battery-pack capacity as the main constraint on near-term vehicle-volume growth. The call left investors to judge how quickly those projects can generate returns; Tesla shares fell further as the discussion progressed.
IBM: an AI spending shift forced a reset
IBM reported $17.2 billion of revenue, up 1%, and operating earnings of $2.93 a share, up 5%. Software revenue rose 5%, including 11% growth at Red Hat, but transaction-processing revenue fell 9%. Infrastructure revenue declined 7% overall even as distributed infrastructure grew 37% and the z17 mainframe program ran nearly 130% ahead of its predecessor at the same point.
Executives said clients had shifted capital toward servers, storage and memory ahead of price increases, delaying some enterprise license agreements. Several deals that slipped out of the second quarter had already closed early in the third. Still, IBM reduced its full-year constant-currency revenue-growth forecast to 4% to 5% and its software-growth forecast to 6% to 8%. The company kept its target for free cash flow to improve by $1 billion. Management said generative AI represented half of consulting signings and more than 30% of consulting backlog, but the call made clear that AI demand can rearrange budgets as well as expand them.
ServiceNow: enterprise AI moved from pilots to contracts
ServiceNow’s subscription revenue increased 24.5% to $3.88 billion, while total revenue reached $3.99 billion. Current remaining performance obligations rose 21% to $13.2 billion, and the company signed 123 deals worth more than $1 million in net-new annual contract value, 40% more than a year earlier.
On the call, executives said AI annual contract value had surpassed $1 billion and was tracking ahead of the company’s path to $1.5 billion by year-end. The number of customers running agentic AI in production had risen ninefold in nine months. Management said AI-native products were producing contract uplifts of 20% to 30%, with Pro Plus above 30%. About half of the quarter’s upside came from federal on-premises revenue pulled forward, but executives said deal cycles had not lengthened and kept a strong view of the federal pipeline. ServiceNow raised its full-year subscription-revenue range to $15.76 billion to $15.78 billion.
Texas Instruments: the chip recovery broadened
Texas Instruments posted revenue of $5.46 billion, up 23%, and earnings of $2.14 a share, including a five-cent tax benefit. Analog revenue rose 26% and embedded-processing revenue increased 16%. The company guided third-quarter revenue to $5.65 billion to $6.15 billion and earnings to $2.23 to $2.57 a share.
Management described the quarter as the start of a broad semiconductor upcycle. Industrial revenue grew about 30%, automotive rose in the mid-teens and data-center revenue doubled, while personal electronics was roughly flat. Executives said direct, customer-by-customer price increases had begun but would have only a small third-quarter effect. They also highlighted added chip content in emerging 800-volt data-center power architectures and said available clean-room capacity should support growth for several years. The expected acquisition of Silicon Labs remains targeted for the first half of 2027.
What the five calls said about AI spending
Together, the calls showed that the AI boom is entering a more discriminating phase. Alphabet can support extraordinary infrastructure spending because cloud demand and margins are rising together. ServiceNow is showing that corporate AI projects can become large recurring contracts. Texas Instruments is benefiting as electricity, power management and connectivity requirements spread through data centers and vehicles.
Tesla and IBM showed the harder side of the cycle. Tesla is funding products whose revenue may arrive well after today’s spending, while its core vehicle business is operating at a narrow margin. IBM is seeing customers choose one part of the technology stack at the expense of another. For the next quarter, the key questions are whether Alphabet can turn capacity additions into durable returns, whether Tesla can demonstrate operating leverage, whether IBM’s delayed software deals close, and whether ServiceNow and TI can sustain their broadening demand. After-hours prices can change before Thursday’s open; the more durable signal is that AI is no longer a single trade, but a test of where each company sits in the spending chain.
This article is for informational purposes and is not investment advice.
