Google launched Bard AI, it’s own chatbot to rival Microsoft and OpenAI’s ChatGPT.
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Tech investors are eager to hear how much industry leaders are bolstering profitability now that they’re in cost-cutting mode.
But there’s one area where they also want to see hefty investments: artificial intelligence.
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Alphabet, Microsoft, Amazon and Meta all reported quarterly results this week, updating Wall Street on their efforts to improve efficiency as economic concerns mount. When it comes to AI and the latest boom in so-called large language models (LLMs) that power products like ChatGPT, the mega-cap tech companies can’t afford to get left behind.
Generative AI programs use increasing amounts of data and processing power to produce outputs that seem like they were made by a human — a block of text, a snippet of code, or a computer-generated image. They require specialized supercomputers that aren’t cheap.
On their earnings calls this week, tech CEOs talked at length about the potential for AI, whether they’re building their own models or rapidly integrating it into products. The common theme was their emphasis on the large sums of money they’ll be spending to build and run these applications.
Here’s what executives from Alphabet, Microsoft, Amazon and Meta told analysts:
Alphabet
Sundar Pichai, chief executive officer of Alphabet Inc.
Kyle Grillot | Bloomberg | Getty Images
Sundar Pichai, Alphabet’s CEO, is under intense pressure to deliver AI products due to the perceived threat that the company’s core Google search engine faces from the sophisticated chatbots hitting the market. The company recently declared an internal “code red.”
Pichai said on Tuesday’s earnings call that the company was making “good progress” towards its AI goals.
“We’ll continue to incorporate generative AI advances to make search better in a thoughtful and deliberate way,” Pichai said.
He said Google is using AI to improve the conversion rate of ads and reduce the amount of “toxic text” that goes into AI models. The company is also combining two primary AI teams, Brain and DeepMind.
Pichai said that in addition to using its own homegrown chips to power its models, it’s using processors from Nvidia, which makes the vast majority of graphics chips used to train and deploy cutting-edge AI.
Microsoft
Microsoft CEO Satya Nadella speaks during an interview in Redmond, Washington, on March 15, 2023.
Chona Kasinger | Bloomberg | Getty Images
Microsoft is using OpenAI’s GPT technology in its Bing search engine, Office, and Teams teleconferencing system.
CEO Satya Nadella says that AI will eventually drive revenue growth and is already sparking increased uptake in the company’s apps. Bing, for example, has seen downloads quadruple since Microsoft added a chatbot, he said. Microsoft has generated over 200 million images through its Bing integration.
Nadella warned that a significant amount of capital will be required to build out the massive datacenters needed to run AI applications.
“We will continue to invest in our cloud infrastructure, particularly AI-related spend, as we scale to the growing demand driven by customer transformation,” Nadella said. “And we expect the resulting revenue to grow over time.”
Amazon
Andy Jassy on stage at the 2022 New York Times DealBook on November 30, 2022 in New York City.
Thos Robinson | Getty Images
Amazon CEO Andy Jassy gave an unusually lengthy response on Thursday to an analyst’s question about the company’s generative AI plans.
Jassy said Amazon is building its own LLMs, and designing data-center chips for machine learning, emphasizing that the market is massive.
“These large language models, generative AI capability, has been around for a while. But frankly, the models were not that compelling until about six to nine months ago,” Jassy said. “They have gotten so much bigger and so much better so much more quickly that it really presents a remarkable opportunity to transform virtually every customer experience that exists.”
Jassy also said Amazon’s size would allow it to become one of a handful of companies building LLMs, which can take hundreds of computers running for weeks, overseen by expensive machine learning engineers.
“There will be a small number of companies that want to invest that time and money and we will be one of them at Amazon,” Jassy said.
Unlike Microsoft and Google, Amazon’s focus is selling access to the technology through its Amazon Web Services division. However, Jassy said Amazon will work on some applications, such as programs to help engineers write code.
“Every single one of our businesses inside of Amazon are building on top of large language models to reinvent our customer experience,” Jassy said. That includes voice assistant Alexa, he said.
Meta
Mark Zuckerberg, co-founder and CEO of Meta Platforms, in July 2021.
Kevin Dietsch | Getty Images News | Getty Images
Meta CEO Mark Zuckerberg tried to dispel the notion that his company is no longer focused on the metaverse after turning his attention in that direction in late 2021.
But he wanted investors to know that Meta can invest in metaverse technologies while simultaneously putting tons of resources into AI, which he called a “key theme” for his company.
Zuckerberg said that while the company has used machine learning to deliver recommendations and power products like Facebook’s news feed or ad systems, a new main area of focus is generative foundation models.
“It’s been a pretty amazing year of progress on this front, and the work happening now is going to impact every single one of our apps and services,” Zuckerberg said.
He said the company would work on a variety of products using the technology, including chat experiences in WhatsApp and Facebook Messenger, tools for making images for posts on Facebook and Instagram, and eventually programs that could spit out entire videos from short descriptions.
A concept he’s particularly excited about is “AI agents,” which often refer to AI programs that can carry out goals.
“There’s an opportunity to introduce AI agents to billions of people in ways that will be useful and meaningful,” Zuckerberg said. One possibility for an AI agent would be to handle customer service for businesses, Meta has said.
Zuckerberg discussed the company’s big investments to build out its datacenters for AI applications. He said the technology was the “main driver” of Meta’s growth in capital expenditures over the past few years.
“At this point we are no longer behind in building out our AI infrastructure,” Zuckerberg said.
That doesn’t mean Meta is done buying graphics processors. Zuckerberg said the company would need to “continue investing,” but would do so after it launches its generative AI products and gets a better grasp on the resources required.
Tesla CEO Elon Musk speaks alongside U.S. President Donald Trump to reporters in the Oval Office of the White House on May 30, 2025 in Washington, DC.
Kevin Dietsch | Getty Images
At Tesla, vehicle sales are slumping, profits are thinning and revenue from regulatory credit sales are poised to dry up due to Republican-led policy changes.
In the past, CEO Elon Musk’s futuristic promises have convinced investors to look past top and bottom line numbers.
Not now.
Following another fairly dismal earnings report this week, Musk told analysts on the call that Tesla’s electric vehicles will soon become driverless, making money for owners while they sleep. He also said Tesla’s robotaxi service, which the company recently started testing in a limited capacity in Austin, Texas, will expand to other states, with a goal of being able to reach half the U.S. population by year-end, “assuming we have regulatory approvals.”
It didn’t matter.
Tesla shares plummeted 8% on Thursday as investors focused on the immediate challenges facing the company, including the rapid rise of lower-cost EV competitors, particularly in China, and a political backlash against Musk that harmed Tesla’s brand in the U.S. and Europe.
Automotive sales declined 16% year-over-year in the second quarter for the EV maker, with weak sales numbers continuing in Europe and California. Musk said there could be a “few rough quarters” ahead because of the EV credits expiring and President Donald Trump’s tariffs.
The stock bounced back some on Friday, gaining 3.5%, but still ended the week down and has now fallen 22% this year, the worst performance among tech’s megacaps. The Nasdaq rose 1% for the week and is up more than 9% in 2025, closing at a record on Friday.
“Look, we love robotaxis. And robots,” wrote analysts at Canaccord Genuity, who recommend buying Tesla’s stock, in a note after the earnings report. “Over time, Tesla is well positioned to benefit from these future-forward opportunities.”
The analysts, however, said that they’re focused on the profit and loss statement, writing: “But we love growth too, in the here and now. We need the P&L dynamics to turn.”
Analysts at Jefferies described the earnings update as “a bit dull.” And Goldman Sachs said Tesla’s robotaxi effort is “still small” with limited technical data points.
Tesla didn’t respond to a request for comment.
Musk, who has previously called himself “pathologically optimistic,” has been able to sway shareholders and send the stock soaring at times with promises of self-driving cars, humanoid robots and more affordable EVs.
But after a decade of missed self-imposed deadlines on autonomous driving, Wall Street is watching Tesla fall behind Alphabet’s Waymo in the U.S. and Baidu’s Apollo Go in China.
In Tesla’s shareholder deck, the company said the second quarter marked the start of its “transition from leading the electric vehicle and renewable energy industries to also becoming a leader in AI, robotics and related services.” The company didn’t offer any new guidance for growth or profits for the year ahead.
Regulatory hurdles
Business Insider reported on Friday that Tesla told staff its robotaxi service could launch in the San Francisco Bay Area as soon as this weekend.
But Tesla hasn’t applied for permits that would be required to run a driverless ridehailing service in California, CNBC confirmed. The company would first need authorizations from the state’s Department of Motor Vehicles and the California Public Utilities Commission (CPUC).
The CPUC told CNBC on Friday, that under existing permits, Tesla can only operate a human-driven chartered vehicle service, not carry passengers in robotaxis.
Waymo driverless vehicles wait at a traffic light in Santa Monica, California, on May 30, 2025.
Daniel Cole | Reuters
On the earnings call, Musk and other Tesla execs claimed the company was working on regulatory approvals to launch in Nevada, Arizona, Florida and other markets, in addition to San Francisco, but offered no details about what would be required.
Within Austin, the company said its robotaxi service had driven 7,000 miles, and that Tesla has been restricting its robotaxis’ to roads with a speed limit of 40 miles per hour. The Austin service involves a small fleet of about 10 to 20 Model Y vehicles equipped with the company’s latest self-driving systems.
The Tesla robotaxis rely on remote supervision by employees in a customer service center, and a human safety supervisor in the front passenger seat, ready to intervene if needed.
Compare that to what Alphabet said on its second-quarter earnings call the same day as Tesla’s results.
“The Waymo Driver has now autonomously driven over 100 million miles on public roads, and the team is testing across more than 10 cities this year, including New York and Philadelphia,” Alphabet said. Meanwhile, Waymo has become significant enough that Alphabet added a category to its Other Bets revenue description in its latest quarterly filing.
“Revenues from Other Bets are generated primarily from the sale of autonomous transportation services, healthcare-related services and internet services,” the filing said. The Other Bets segment remains relatively small, with revenue coming in at $373 million in the quarter.
Regardless of investor skepticism, Musk is more bullish than ever.
On Friday, the world’s richest person posted on his social network X that he thinks Tesla will someday be worth $20 trillion. On the earnings call earlier in the week, he said that when it comes to AI for cars and robots, “Tesla is actually much better than Google by far” and “much better than anyone at real world AI.”
CORRECTION: The Waymo Driver has now autonomously driven over 100 million miles on public roads, according to Alphabet. A previous version misstated the number of miles.
A vehicle Tesla is using for robotaxi testing purposes on Oltorf Street in Austin, Texas, US, on Sunday, June 22, 2025.
Tim Goessman | Bloomberg | Getty Images
In an earnings call this week, Tesla CEO Elon Musk teased an expansion of his company’s fledgling robotaxi service to the San Francisco Bay Area and other U.S. markets.
But California regulators are making clear that Tesla is not authorized to carry passengers on public roads in autonomous vehicles and would require a human driver in control at all times.
“Tesla is not allowed to test or transport the public (paid or unpaid) in an AV with or without a driver,” the California Public Utilities Commission told CNBC in an email on Friday. “Tesla is allowed to transport the public (paid or unpaid) in a non-AV, which, of course, would have a driver.”
In other words, Tesla’s service in the state will have to be more taxi than robot.
Tesla has what’s known in California as a charter-party carrier permit, which allows it to run a private car service with human drivers, similar to limousine companies or sightseeing services.
The commission said it received a notification from Tesla on Thursday that the company plans to “extend operations” under its permit to “offer service to friends and family of employees and to select members of the public,” across much of the Bay Area.
But under Tesla’s permit, that service can only be with non-AVs, the CPUC said.
The California Department of Motor Vehicles told CNBC that Tesla has had a “drivered testing permit” since 2014, allowing the company to operate AVs with a safety driver present, but not to collect fees. The safety drivers must be Tesla employees, contractors or designees of the manufacturer under that permit, the DMV said.
In Austin, Texas, Tesla is currently testing out a robotaxi service, using its Model Y SUVs equipped with the company’s latest automated driving software and hardware. The limited service operates during daylight hours and in good weather, on roads with a speed limit of 40 miles per hour.
Robotaxis in Austin are remotely supervised by Tesla employees, and include a human safety supervisor in the front passenger seat. The service is now limited to invited users, who agree to the terms of Tesla’s “early access program.”
On Friday, Business Insider, citing an internal Tesla memo, reported that Tesla told staff it planned to expand its robotaxi service to the San Francisco Bay Area this weekend. Tesla didn’t respond to a request for comment on that report.
In a separate matter in California, the DMV has accused Tesla of misleading consumers about the capabilities of its driver assistance systems, previously marketed under the names Autopilot and Full Self-Driving (or FSD).
Tesla now calls its premium driver assistance features, “FSD Supervised.” In owners manuals, Tesla says Autopilot and FSD Supervised are “hands on” systems, requiring a driver at the wheel, ready to steer or brake at all times.
But in user-generated videos shared by Tesla on X, the company shows customers using FSD hands-free while engaged in other tasks. The DMV is arguing that Tesla’s license to sell vehicles in California should be suspended, with arguments ongoing through Friday at the state’s Office of Administrative Hearings in Oakland.
Under California state law, autonomous taxi services are regulated at the state level. Some city and county officials said on Friday that they were out of the loop regarding a potential Tesla service in the state.
Stephanie Moulton-Peters, a member of the Marin County Board of Supervisors, said in a phone interview that she had not heard from Tesla about its plans. She urged the company to be more transparent.
“I certainly expect they will tell us and I think it’s a good business practice to do that,” she said.
Moulton-Peters said she was undecided on robotaxis generally and wasn’t sure how Marin County, located north of San Francisco, would react to Tesla’s service.
“The news of change coming always has mixed results in the community,” she said.
Brian Colbert, another member of the Marin County Board of Supervisors, said in an interview that he’s open to the idea of Tesla’s service being a good thing but that he was disappointed in the lack of communication.
“They should have done a better job about informing the community about the launch,” he said.
Alphabet’s Waymo, which is far ahead of Tesla in the robotaxi market, obtained a number of permits from the DMV and CPUC before starting its driverless ride-hailing service in the state.
Waymo was granted a CPUC driverless deployment permit in 2023, allowing it to charge for rides in the state. The company has been seeking amendments to both its DMV and CPUC driverless deployment permits as it expands its service territory in the state.
Meta CEO Mark Zuckerberg makes a keynote speech during the Meta Connect annual event, at the company’s headquarters in Menlo Park, California, on Sept. 25, 2024.
Manuel Orbegozo | Reuters
Meta CEO Mark Zuckerberg on Friday said Shengjia Zhao, the co-creator of OpenAI’s ChatGPT, will serve as the chief scientist of Meta Superintelligence Labs.
Zuckerberg has been on a multibillion-dollar artificial intelligence hiring blitz in recent weeks, highlighted by a $14 billion investment in Scale AI. In June, Zuckerberg announced a new organization called Meta Superintelligence Labs that’s made up of top AI researchers and engineers.
Zhao’s name was listed among other new hires in the June memo, but Zuckerberg said Friday that Zhao co-founded the lab and “has been our lead scientist from day one.” Zhao will work directly with Zuckerberg and Alexandr Wang, the former CEO of Scale AI who is acting as Meta’s chief AI officer.
“Shengjia has already pioneered several breakthroughs including a new scaling paradigm and distinguished himself as a leader in the field,” Zuckerberg wrote in a social media post. “I’m looking forward to working closely with him to advance his scientific vision.”
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In addition to co-creating ChatGPT, Zhao helped build OpenAI’s GPT-4, mini models, 4.1 and o3, and he previously led synthetic data at OpenAI, according to Zuckerberg’s June memo.
Meta Superintelligence Labs will be where employees work on foundation models such as the open-source Llama family of AI models, products and Fundamental Artificial Intelligence Research projects.
The social media company will invest “hundreds of billions of dollars” into AI compute infrastructure, Zuckerberg said earlier this month.
“The next few years are going to be very exciting!” Zuckerberg wrote Friday.