Key Takeaways
- Alphabet (GOOGL, GOOG) reported better-than-expected Q2 revenue and a 22% increase in EPS, with profits jumping 20% on strong ad and cloud units, while also raising its 2025 capital expenditures guidance to approximately $85 billion from $75 billion due to massive demand for cloud services and AI infrastructure.
- Tesla (TSLA) faced a significant Q2 earnings shortfall, with net income plunging 16% and profits slumping 23% as automotive sales continued to fall amidst brand sentiment issues and rising competition.
- United Rentals (URI) and ServiceNow (NOW) both exceeded Q2 expectations and raised their full-year guidance, with ServiceNow specifically citing strong demand for its AI-enabled software and expecting continued growth.
- President Donald Trump's administration unveiled an "AI Action Plan" aiming for U.S. dominance through deregulation and accelerated AI development, while the Supreme Court allowed him to remove Consumer Product Safety Commission members.
- Chipotle (CMG) reported a mixed Q2, with revenue of $3.1 billion slightly missing estimates and comparable sales dropping 4%, though adjusted EPS was in line with expectations.
Corporate Earnings Highlights
Second-quarter earnings reports are revealing a mixed landscape across key sectors. Alphabet (GOOGL, GOOG) delivered a robust performance, with profits jumping 20% on the strength of its advertising and cloud units. The tech giant reported better-than-expected revenue and a 22% increase in earnings per share. This strong showing was bolstered by significant adoption of its AI features, with AI Overviews now serving over 2 billion users and driving a 10% increase in search queries. Despite the strong revenue, Alphabet revised its 2025 capital expenditures guidance higher to approximately $85 billion from an earlier forecast of $75 billion, reflecting increased investment in AI capabilities and cloud infrastructure.
In contrast, Tesla (TSLA) faced a challenging quarter, with its second-quarter earnings falling short of Wall Street's estimates. The electric vehicle maker's net income plunged 16%, and profits slumped 23%, marking further steep declines as automotive sales continue to fall. Brand sentiment and rising competition were cited as factors taking a toll on the automaker's performance.
Other companies demonstrated resilience and growth. United Rentals (URI) reported strong Q2 2025 earnings, with revenue of $3.94 billion surpassing estimates of $3.90 billion and adjusted EPS of $10.47 exceeding the $10.45 estimate. The company also raised its full-year 2025 revenue outlook to $15.8 billion–$16.1 billion and adjusted EBITDA to $7.3 billion–$7.45 billion. Similarly, ServiceNow (NOW) lifted its guidance, driven by growth in AI adoption. The company's Q2 revenue reached $3.22 billion against an estimated $3.12 billion, and adjusted EPS was $4.09 compared to an estimated $3.58. ServiceNow also provided optimistic Q3 and full-year subscription revenue guidance, emphasizing the real impact of AI in its business.
CSX (CSX) reported Q2 2025 revenue of $3.57 billion, slightly below estimates, but operating income of $1.28 billion exceeded expectations. Adjusted EPS came in at $0.44, above the $0.42 estimate. IBM (IBM) also saw its results beat expectations, leading the company to push up its full-year guidance, despite weaker-than-expected sales in its software segment.
However, Chipotle (CMG) experienced a decline in earnings due to lower same-store sales. The restaurant chain's Q2 2025 revenue was $3.1 billion, just shy of the $3.11 billion estimate, and comparable sales decreased by 4%. Mattel (MAT) reinstated its full-year outlook, though uncertainty around demand remains. Rollins (ROL) posted Q2 revenue of $1 billion, exceeding estimates, with EPS of $0.29 and adjusted EPS of $0.30.
Policy and Market Developments
President Donald Trump's administration made several significant announcements. His plan for American dominance in artificial intelligence aims to free up U.S. companies to move fast, emphasizing deregulation and accelerated development. The White House reiterated that any talks of an EU trade deal remain speculation unless confirmed by President Trump himself. The Supreme Court also issued a decision allowing President Trump to dismiss Consumer Product Safety Commission members for now. House Speaker Mike Johnson is reportedly betting that the upfront rewards from President Trump's tax law will help Republicans retain their House majority in the 2026 midterm elections.
In other market news, T-Mobile (TMUS) announced its UScellular acquisition is set to close on August 1 and revealed a spectrum asset swap with Grain Management, involving the divestment of 800 MHz licenses for $2.9 billion in cash in exchange for 600 MHz spectrum. The company expects a $1.5 billion cash tax benefit in 2026 and gained more wireless and internet subscribers than its rivals in the second quarter. Amazon's (AMZN) Jeff Bezos sold 4.3 million shares on July 21, as part of a pre-arranged trading plan, with prices ranging from $226.99 to $228.55 per share. Japanese investors are reportedly betting on the risk of the unknown over the stagnation associated with Ishiba.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.