11AM Hour: Alphabet & Tesla Tumble, TD Bank's Jeff Solomon on the Economy & Former SpaceX Engineer on Upcoming Launch 7/23/26

**Sara Eisen** (0:00)
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**Sara Eisen** (1:06)
Good Thursday morning. Welcome to Squawk on the Street. I'm Sara Eisen with Carl Quintanilla, live from Post 9 of the New York Stock Exchange. Today, big techs, big CapEx surge, spooking investors. Alphabet and Tesla seeing their worst day in more than a year. IBM CEO telling us last hour, it cut guidance because customers too are having to spend more on AI. It's changing behaviors. We'll discuss the trend with the head of tech investment banking at Jefferies.

**Carl Quintanilla** (1:30)
Oil prices jumping for a fifth day. Brent now closer to 101 than it is to 100, above 100 for the first time since the end of May as new hostilities threaten supply routes. We're going to break down the risks for investors with TD Banks, Jeffery Solomon.

**Sara Eisen** (1:44)
And SpaceX shares hitting a new low this morning. Investors awaiting an all-important Starship test flight later today. We'll discuss why it's so important with former SpaceX Starship engineers Scott Morton, who has his new AI company.

**Carl Quintanilla** (1:57)
Meantime sector-wise being led this morning by some industrials, clearly Energy and some Health Care. S&P down more than a percent. Nasdaq 100 down almost two and a half. Yields are the other story as that 10-year at 4.7 is blowing past the range that we pretty much had in place all year. And the long bond got awfully close to 5.2 this morning. We're going to watch that. Let's begin, though, with big tech earnings. Alphabet shares heading lower as the company raised its capex forecast. Our Mackenzie Segalos has been watching all of this since the moment it hit the tape. Hey, Mack.

**Mackenzie Segalos** (2:30)
Hey, Carl. So the street actually largely pushing back on the sell-off in Alphabet shares this morning with most analysts maintaining their ratings and several calling the weakness a buying opportunity. Mizuho says the capex increase was broadly expected and the much bigger surprise was cloud with revenue and backlog both jumping 82% and token use surging nearly 40% sequentially. JP Morgan says that's clear evidence that the AI spending is producing returns and Cloud Chief Thomas Kurian telling our Jim Cramer just a moment ago that existing customers are now spending more than 50% above their commitments pointing to what he called unprecedented demand and the advantage of owning the full AI stack. But Kurian's message, not turning shares around, they're down around 7.5% now. We saw sentiment initially sour on the earnings call last night when management said that the capacity is so tight that it is prioritizing Gemini over outside cloud customers and then raise this year's CapEx outlook to as much as $205 billion with another significant increase coming in 2027
And despite its high margin ad business, Apple Alphabet saw free cash flow flip negative in Q2, which was much sooner than analysts expected. The price target changes are reflecting some of that caution. Several firms held steady, Pivotal raised by just $5 while Piper, Cantor and DA Davidson cut their targets as they modeled much higher spending and weaker cash generation. Guys?

**Sara Eisen** (3:51)
Getting hit today on all those concerns, I guess. Down 7%.
Thank you, Mackenzie. Tesla shares also sharply lower, more than 13% now. After earnings misestimates, Phil LeBeau with more on the Street's reaction to that one, Phil.

**Phil LeBeau** (4:04)
And the Street is largely, Sara, saying have some patience here. We knew they would be spending a lot of money. And that's what you hear from the analysts today. Yes, the results are not there yet, but they believe that they ultimately are on track to be there for Tesla. Let's start first off with Morgan Stanley, putting on a note saying, we view Tesla's accelerating capex cycle as a necessary investment to secure leadership in autonomy and robotics. JP Morgan out with a similar theme, lower estimates on large margin miss with investments ramping. Let's give you some numbers to put behind these investments. In the second quarter, capex spend was 5.79 billion. That's up 142% compared to the second quarter of last year. And remember, they've said, this year, they expect capex at Tesla to be more than $25 billion.