President-elect Donald Trump’s AI action plan, outlined in his December 2024 executive order, aims to position the U.S. as a global AI leader while addressing national security and economic concerns. The plan has strengths in one key area but falls short in another, reflecting a mixed approach to America’s AI future. **Strength: National Security Focus** Trump’s plan prioritizes AI development for military and intelligence applications, emphasizing U.S. dominance in AI-driven defense systems. It calls for increased investment in AI to counter strategic rivals like China, which has heavily funded its AI sector. The order directs agencies to accelerate AI adoption in areas like cybersecurity and surveillance, aligning with growing concerns about technological sovereignty. This focus responds to calls from defense experts for robust AI integration to maintain a competitive edge, especially as adversaries advance their capabilities. **Shortcoming: Economic and Workforce Gaps** However, the plan lacks a clear strategy for addressing AI’s broader economic impact, particularly on jobs and workforce development. While it nods to innovation and private-sector growth, it offers little detail on reskilling workers displaced by AI automation—a critical issue as industries like manufacturing and services face disruption. Critics argue this oversight risks exacerbating inequality and missing opportunities to foster inclusive growth. Unlike China’s comprehensive AI workforce programs, Trump’s order leaves education and labor market policies vague, potentially undermining long-term competitiveness. **Balancing Act** Trump’s AI vision answers the urgent call for national security but sidesteps the economic complexities of AI adoption. To fully lead in AI, the U.S. will need a more holistic approach, blending defense priorities with robust plans for workforce adaptation and innovation ecosystems.
Alphabet shares (GOOGL.O) rose nearly 3% before the bell on Thursday as the Google parent's earnings underscored a key message to investors: AI spending is climbing, but so are the returns.
The tech giant has raised its 2025 capital spending forecast by $10 billion to $85 billion and signaled even higher outlay next year, stepping up efforts to meet soaring cloud demand and stay competitive in Silicon Valley’s escalating AI race.
Its cloud-computing unit delivered an almost 32% jump in second-quarter revenue, surpassing expectations, as investments in in-house chips and the Gemini AI model began to pay off.
The results bode well for rivals Microsoft (MSFT.O) and Amazon.com (AMZN.O), both of which have been stepping up data center investments and operate larger cloud businesses.
"Google came back fighting this quarter," said Bernstein analyst Mark Shmulik. "Investors have long been clamoring for Google to get more ‘aggressive’ in the AI race," he added.
An early AI pioneer with its invention of the Transformer model - the foundation of most modern generative AI - Google appeared to fall behind OpenAI and Microsoft last year.
But it has rebounded this year, with AI Mode reaching 100 million monthly users just two months into its wider rollout, and Gemini surpassing 450 million monthly users.
Its ad business, which accounts for about three-quarters of its sales, also continues to fare well in the face of economic uncertainty wrought by tariffs and geopolitical tensions.
Revenue in the business a rose better-than-expected 10.4%, a positive sign for rivals such as Meta (META.O) and Snap (SNAP.N) that rely on digital ads for most of their revenue.
At least 17 brokerages raised their price targets on Google stock after the results, taking the median target to $210.
Still, some analysts warned the higher spending may draw fresh scrutiny from investors, who have largely stayed on the sidelines this year. Alphabet shares are up just 0.5% in 2025, trailing Microsoft's 20% increase and 21% rise in Meta stock, also held back by regulatory battles that are looking to break its illegal monopoly in the search and the ad-tech market.
Alphabet's 12-month forward price-to-earnings ratio stands at 18.88, trailing Microsoft's (MSFT.O) 33.03 and Amazon's (AMZN.O) 33.31, according to data compiled by LSEG.
"On paper, it has all the right tools to lead in AI - cutting-edge models and massive distribution," said Matt Britzman, senior equity analyst, Hargreaves Lansdown.
"That said, until there's more confidence AI integration won’t cannibalise core search revenue, and some clarity around ongoing legal battles, there’s enough uncertainty to cap near-term upside."
The fallout from Elon Musk’s plunge into politics a year ago is still hammering his Tesla business as both sales and profits dropped sharply again in the latest quarter.
The car company that has faced boycotts for months said Wednesday that revenue dropped 12% and profits slumped 16% in the three months through June as buyers continued to stay away.
“The perception of Elon Musk, its chief executive, has rubbed the sheen right out of what once was a darling and soaring automotive brand,” wrote Forrester analyst Dipanjan Chatterjee in an email. Tesla is “a toxic brand that is inseparable from its leader.”
Quarterly profits at the electric vehicle, battery and robotics company fell to $1.17 billion, or 33 cents a share, from $1.4 billion, or 40 cents a share. That was the third quarter in a row that profit dropped. On an adjusted basis, the company said it earned 40 cents a share, matching Wall Street estimates.