The Information · Tech & AI
TIER 4 Thu, 24 Jul 2025 00:05:41 +0000 (UTC)
Most CEOs reporting a 12% decline in quarterly revenues would adopt a sober attitude on their earnings call. ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ | | | | Jul 23, 2025 ---|--- | # The Briefing --- | | By Theo Wayt ---|--- | | | | Supported by | ---|--- | | _Thanks for reading The Briefing, our nightly column where we break down the day’s news. If you like what you see, I encourage you tosubscribe to our reporting here._ * * * Greetings!Most CEOs reporting a 12% decline in quarterly revenues would adopt a sober attitude on their earnings call. Not Elon Musk, who opened Tesla’s analyst call on Wednesday with what sounded suspiciously like a penis joke, and then proceeded to make the rather, er, _ambitious_ prediction that Tesla’s robotaxis would be available to half the U.S. population by the end of this year—“subject to regulatory approvals,” a qualifier that renders the projection meaningless. A little later in the call, he started to giggle.It’s doubtful few investors were amused. The fact that revenue fell in the quarter isn’t surprising, given that Tesla had reported on July 2 that vehicle deliveries fell 13.5% in the second quarter. But it is now clear that the company’s revenue decline is accelerating, even as Musk focuses his attention on longer-term bets like robotaxis and robots. A looming end to government incentives for electric cars will pressure Tesla’s sales even more later this year—Musk acknowledged a “few rough quarters” are possibly coming in the near term, before he added that Tesla’s technological leaps would make up for any tough quarters by mid to late 2026. It’s hard to know how seriously to take his latest robotaxi prediction. Musk had already forecast last year that Tesla would launch robotaxi service this year in California and Texas. That service launched, on an extremely limited basis, in Austin, Texas, last month. It has yet to launch in California—regulatory approvals are more stringent there than in Texas. Another Tesla executive said on the call that the company is planning to launch in the San Francisco Bay Area next but didn’t say exactly when. They said a human might have to be in the driver’s seat to comply with regulations. Meanwhile, Tesla is testing in Florida and Nevada, the executive added. Tesla’s problem with robotaxis is that Alphabet’s Waymo is getting ahead of it. That company has a real robotaxi service operating in five cities and has plans for two more next year. Even if Tesla successfully scales up its robotaxi program, it could end up being the equivalent of Lyft compared to Alphabet’s more successful Uber. Tesla gave investors at least one sign it’s taking the current sales decline seriously: The company said it’s planning to start volume production of a more affordable model in the second half of this year, which could help stanch the bleeding caused by cheaper electric vehicles from Chinese competitors. Nonetheless, Tesla stock fell about 4%**** during the course of the call. ### Google Is Firing on All Cylinders The other big tech company reporting on Wednesday, Google, had a much better story to tell. Its search revenue growth accelerated from the first quarter, which should calm concerns, at least for now, that growing use of alternatives like ChatGPT would erode Google’s cash cow search business. Google Cloud’s revenue growth also accelerated, and the division reported profit margins surged to 20.7% from 11% a year earlier. Google stock, which has been creeping up in recent weeks, rose a further 1.8% in after-hours trading. Google CEO Sundar Pichai told analysts ebulliently, “AI is positively impacting every part of the business.” That might be true, but the company is also having to pay more for artificial intelligence. Google also raised its estimate for full-year capital expenditures $10 billion to $85 billion, citing the need to meet customer demand for cloud services by increasing data center capacity. At the same time, Google is hiring more people—its head count in the second quarter hit 187,103, only 3,000 below the late 2022 peak that preceded mass layoffs in early 2023. And the company said head count would rise further in the third quarter.These higher costs—capex translates to rising depreciation over time—will dampen Google’s profits in the coming years, which raises the bar for what the company has to get out of AI. Pichai expressed confidence that Google can earn a “healthy” return on investment on its capex investments. Whether that’s true is, of course, the hundred-billion-dollar question._—Martin Peers_ ### In Other News * President Donald Trump said he considered trying to break up Nvidia to increase competition in AI chips but abandoned the idea after realizing it wouldn’t be easy, Bloomberg reported. * Trump made the comments as the White House released the administration’s long-awaited “AI Action Plan” Wednesday, laying out a blueprint that would give AI companies more room to expand with fewer restrictions. * Amazon is closing its AI lab in Shanghai due to rising U.S.-China tensions, according to the Financial Times. * Sonos’ interim CEO is dropping the interim from his title. In a post on X, Tom Conrad said the board of directors had invited him to become the permanent CEO of Sonos, which makes internet-connected speakers. * Retail giant Walmart has hired Daniel Danker from Instacart, where he was chief product officer and head of its online grocery business. At Walmart, Danker will work on AI-related initiatives and lead product management and design, CEO Doug McMillon said in a memo to employees Wednesday. ### Recommended Newsletter Dealmaker was named the “Best in Business” newsletter for its insightful coverage of private technology and the AI hype cycle. Start receiving the newsletter here. | | A message from Elastic --- ### How could your industry use generative AI? 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