Hey Superheroes,
This week, U.S. stocks hit fresh record highs as markets cheered a new trade agreement between the U.S. and Japan, easing concerns about global supply chains. Japan avoided a looming 25% tariff by agreeing to a 15% rate in exchange for opening up to U.S. agricultural goods and pledging a US$550 billion investment into the U.S. economy.
At home, the RBA’s July meeting minutes revealed a split board with some pushing for an immediate rate cut amid signs of slowing growth and rising unemployment. Ultimately the majority chose to keep rates on hold preferring a more cautious approach.
Markets now appear more focused on earnings season than monetary policy, especially as heavyweight tech stocks take centre stage.
Let’s take a look at two of the biggest names that reported this week.
Tesla Hits the Brakes
Tesla’s Q2 results, released yesterday, marked its sharpest year-on-year revenue drop in over a decade.
Things seem to be getting tough for the EV maker… Here’s a quick rundown on the news.
💰 Q2 snapshot
- Revenue: US$21.3 billion (vs US$22.3 billion expected, ↓12% YoY)
- EPS: US$0.45 (vs US$0.60 expected)
- Vehicle Deliveries: 443,956 (↓13.5% YoY)
- Operating Margin: 7.6% (vs 9.6% a year ago)
Net income slid to US$1.17 billion, sending shares down more than 8% as investor sentiment soured.
Vehicle demand softened across key markets, and the looming expiry of U.S. federal EV tax credits is expected to dent sales further in the coming months.
📉 Bitcoin Blunder
Tesla also confirmed it sold 75% of its Bitcoin holdings in mid-2022, just before prices rebounded. With Bitcoin now trading above US$119,000, analysts estimate the move may have cost the company over US$3.5 billion in unrealised gains.
That said, the company’s remaining crypto still contributed US$284 million to Q2 earnings, offering a temporary cushion as EV margins continue to compress.
⚙️ Betting on Autonomy
Tesla’s growth story is now centred on its long-term AI and robotics vision. A fully autonomous robotaxi is being trialled in Austin with broader rollout targeted for 2026 under the “Cybercab” platform.
The company is also ramping up production on a new affordable EV model, expected next quarter, which Musk claims will drive mass-market appeal without eroding premium sales.
🔮 What happens next?
Musk has sadly warned of “a few rough quarters” ahead as Tesla weathers weaker demand, rising competition and the end of key EV incentives.
With no new model until 2026 and brand sentiment under pressure, the near-term outlook remains cloudy. For now, autonomy and AI seem to be the narrative keeping growth-focused investors on board.
Google Rides the AI Wave
While Tesla’s numbers raised eyebrows, its fellow Magnificent 7 peer Alphabet delivered a strong Q2, driven by resilient ad revenue, booming cloud demand and a surge in AI activity.
The tech giant isn’t just keeping up with the AI race, it’s laying down the infrastructure to lead it.
💰 Earnings snapshot
- Revenue: US$96.43 billion (vs US$94 billion expected, ↑14% YoY)
- EPS: US$2.31 (vs US$2.18 expected)
- Google Cloud Revenue: US$13.62 billion (vs US$13.11 billion, ↑32% YoY)
- Ad Revenue: US$71.34 billion (↑10.4% YoY)
- Net Income: US$28.2 billion (↑~20% YoY)
☁️ Cloud Surge and Spending Spike
Google Cloud was the quarter’s standout, growing 32% year-on-year and winning new enterprise deals including OpenAI, which selected Google’s infrastructure for ChatGPT.
Thanks to this, Google lifted its 2025 capital expenditure forecast (capex) from US$75 billion to US$85 billion, citing “strong and growing demand” for AI and cloud services. Capex is expected to rise again next year.
🤖 AI at Scale
AI is quickly becoming core to Google’s user experience. AI Overviews, Google’s generative search product, has now reached over 2 billion users globally. Gemini, Google’s AI chatbot, now has more than 450 million monthly active users.
Alphabet also acquired Windsurf, a coding-focused AI startup, for US$2.4 billion to deepen its AI engineering bench.
📺 Core Businesses Hold Firm
And despite rising AI competition, Alphabet’s ad engine continues humming. Search brought in US$54.2 billion for the quarter while YouTube advertising came in above expectations at US$9.8 billion.
The company’s “Other Bets” segment – which includes Waymo and Verily – added US$373 million in revenue, though losses there also widened to US$1.25 billion.
For now, it looks like Google is positioning itself as the backend of the AI boom, investing heavily in both infrastructure and consumer tools. With capex rising and margins under scrutiny, the challenge now is converting AI scale into long-term profitability.
🔦 Some other things we’re shining the Spotlight on:
INTEL PULLS THE PLUG: Intel beat revenue expectations with US$12.86 billion in Q2 but reported a US$2.9 billion net loss. New CEO Lip-Bu Tan announced major cuts to chip factory spending, declaring “no more blank cheques” for underutilised capacity.
COKE’S COST CUT COCKTAIL: Coca-Cola delivered margin magic in Q2, even as revenue took a hit from currency headwinds. Operating margin surged to 34.1% from 21.3% YoY, while gross margin rose to 62.4% from 61.1%, thanks to product mix and tight cost control.
INSIGNIA TAKES THE MONEY: Insignia Financial (ASX:IFL) accepted a $3.2 billion cash offer from U.S. private equity giant CC Capital at $4.80 per share. After six months of takeover drama, the board is backing the deal, marking CC’s first big Australian buy.
📅 Key Wall Street Earnings to watch next week
- Tue 29 Jul: Boeing, PayPal, P&G, Booking Holdings, Spotify, Visa, Starbucks
- Wed 30 Jul: Microsoft, Meta Platforms, Etsy, ARM Holdings, Ford
- Thu 31 Jul: Amazon.com, Apple, Mastercard, Strategy, Cloudflare
- Fri 1 Aug: AMC Entertainment, Exxon Mobil, Chevron, Moderna
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