Alphabet and Tesla dragged the Nasdaq down more than 2.5% as Wall Street experienced a broad-based technology selloff. The decline came amid ongoing tensions between the European Union and American technology companies, with the EU hitting Google with a $1 billion fine for illegally undercutting competition through its search engine dominance. President Trump has previously threatened retaliation against the EU for what he views as unfair targeting of American technology companies.
Google announced 24% second-quarter sales growth of $119.8 billion, which was 2.5% higher than the analyst consensus estimate of $116.9 billion. The company's operating margins are expanding, which helped earnings surge 294% to $9.11 per share. This significantly exceeded the analysts' consensus earnings estimate of $2.95 per share, resulting in a whopping 208.8% earnings surprise. Google also announced it now expects to spend between $195 billion and $205 billion on AI infrastructure, up from its prior guidance of $180 billion to $190 billion.
GE Vernova posted a 2.8% revenue surprise and a 20.3% earnings miss in the second quarter, but the company's order backlog emerged as the key positive development. The company's total backlog grew to more than $176 billion, a 37% year-on-year increase, with management indicating it's on track to grow to $200 by 2027. A growth in equipment orders, which more than doubled, and a 15% increase in service orders contributed to the increase. Total orders grew 88%, led by the power and electrification segments. As a result, the company raised its full-year revenue guidance above analyst estimates to $45.5 billion to $46.5 billion.
Super Micro Computer announced that its order backlog exceeded $60 billion, significantly exceeding investor expectations. The company also announced that it expects its operating margins to be between 15% and 17%, significantly above its previous forecast of 8.2% to 8.4%. This expansion in operating margins often results in substantial earnings surprises for investors. The strong order backlog performance across both companies demonstrates Wall Street's continued obsession with order backlogs, with AI and data center companies with increasing order backlogs expected to continue prospering.
