TNB Tech Minute: This Big Tech Earnings Metric Is Spooking Wall Street

**Imani Moise** (0:01)
Here's your Morning TNB Tech Minute for Thursday, July 23rd. I'm Imani Moise for the Wall Street Journal. Investors are getting nervous about Big Tech's AI spending spree. While Tesla and Alphabet both reported soaring second-quarter revenue yesterday, their shares slipped during morning trading, after both tech giants revealed negative free cash flow. Free cash flow is essentially the money companies have left over after expenses and major investments, and an indication of how much cash can be returned to investors. Google said the metric would remain under pressure as the company deepens its investments in AI.
The tech giant lifted its capital spending forecast to as much as $205 billion this year. Analysts say Wall Street has largely viewed $200 billion as a do-not-cross line, and investors are reportedly growing frustrated by a lack of explanation on how these massive infrastructure investments will ultimately translate to revenue.
New research from Google suggests that so far, AI is mainly being used to help workers not replace them. This report is based on millions of de-identified interactions with Google's AI tools globally. Within the US, researchers found that AI is being used across a large number of occupations. According to the study, it's generally used as a collaborative tool, not to wholly take over a task. Economists remain split on whether the technology will ultimately eliminate jobs or simply make workers more productive.
And shares in STMicroelectronics plunged about 15% in Europe today after its sales guidance fell short of expectations. The chipmaker forecast third-quarter revenue of $3.7 billion, just shy of analysts' estimates. Booming demand from AI has propelled global semiconductor stocks to new highs this year. But bouts of volatility have weighed on the sector in recent weeks, as some investors worry valuations and AI spending might be too high. And that's your TNB Tech Minute. We'll be back this afternoon with more.

**SPEAKER_2** (1:57)
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