Dear reader,

Here’s a puzzle. Electric car company Tesla presents a terrible set of first-quarter earnings and is rewarded with a 10 per cent share price jump. Social network giant Meta doubles net income and watches as its share price slides more than 12 per cent. Microsoft reports faster revenue growth than Alphabet but sees gains in after-hours trading dwarfed.

The explanation is spending on artificial intelligence. Meta, Tesla, Alphabet and Microsoft are in the middle of grand (read, expensive) plans to go beyond their existing business models by investing heavily in AI. Meta is on course to raise capex by up to 42 per cent this year, while Alphabet is forecasting a 49 per cent increase. In the last quarter, capex at Microsoft increased 79 per cent compared with last year. At Tesla, it rose 34 per cent. These increases exceed revenue gains (or, in Tesla’s case, losses).