Tesla Crashes 14.53%, Alphabet Sinks 7.09% as AI Capex Concerns Wipe Out $200bn in Market Value

Mumbai, July 24:: Wall Street witnessed a brutal selloff in megacap technology stocks on Thursday as disappointing quarterly results from Tesla and Alphabet reignited fears over ballooning artificial intelligence spending, wiping out more than $200 billion in combined market capitalisation. The selloff came amid escalating Middle East tensions that pushed Brent crude past $100 a barrel, further pressuring equities. 

Alphabet Sinks 7.09% Despite Earnings Beat on $205bn AI Spending Plan 

Alphabet shares plunged 7.09% to $318.26, erasing nearly all of its year-to-date gains, despite the Google parent reporting better-than-expected second-quarter results. The company posted earnings of $9.11 per share on revenue of $119.80 billion, representing 24% year-over-year growth, ahead of consensus estimates. 

The sharp decline was triggered by Alphabet’s decision to raise its full-year capital expenditure guidance for the second time in three months. The tech giant now expects 2026 capital expenditures between $195 billion and $205 billion, up from the prior range of $180 billion to $190 billion provided in April. Chief Financial Officer Anat Ashkenazi told analysts the increase was “primarily due to an acceleration in the delivery of [cloud computing] capacity to meet growing demand,” and warned that capex would “increase significantly” in 2027. 

Investors focused on the mounting costs of Alphabet’s AI infrastructure buildout, reflecting a broader market shift where Wall Street now demands clearer returns on massive AI investments. The selloff dragged fellow hyperscalers lower, with Meta Platforms declining 3.38%, Microsoft falling 2.23%, and Amazon dropping 4.58%. 

Separately, the European Union fined Google €890 million ($1 billion) under the Digital Markets Act for allegedly favouring its own search services and restricting developers on Google Play. Total EU antitrust fines against the tech giant have now reached €10.38 billion. 

Tesla Crashes 14.53% as Earnings Miss, Capex Doubles to $5.79bn 

Tesla shares suffered their worst single-day decline since June 2025, plunging 14.53% to $319.66, as the electric vehicle maker’s second-quarter results raised fresh concerns about profitability amid aggressive capital spending. 

The company reported earnings per share of $0.33, significantly below Wall Street estimates of $0.55 and representing an 18% decline from the same quarter last year. While revenue increased 26% year-over-year to $28.2 billion, surpassing expectations, gross margins contracted by more than 2 percentage points to 16.9% as regulatory credit revenue declined and average selling prices weakened. 

Capital expenditures more than doubled year-over-year to $5.79 billion, a staggering 142% increase, as Tesla reaffirmed plans to spend more than $25 billion on capex this year, up from $8.5 billion in 2025. The investment surge pushed the company into negative free cash flow for the first time since early 2024, burning through more than $1 billion during the quarter. 

The earnings miss handed Tesla short sellers a $4.12 billion one-day paper profit, according to estimates. The stock is now down nearly 30% in 2026, making it the worst performer among the Magnificent Seven. Chief Executive Elon Musk signalled growing collaboration between Tesla and SpaceX across multiple projects, particularly with the Terafab initiative, though he declined to comment on potential company combinations. 

Lockheed Martin Jumps 10.54% as Defence Spending Outlook Brightens 

Lockheed Martin shares surged 10.54% to $568.59, gaining $54.23, after the defence contractor raised its full-year forecast amid escalating Middle East tensions. The company reported strong quarterly results and benefited from increased defence spending expectations as geopolitical risks intensified. 

The defence sector broadly outperformed, with RTX advancing 7.28% to $137.19 and GE Aerospace rising 2.32% to $349.00, as investors rotated into defence stocks on expectations of higher military spending. The gains in defence names provided some offset to the broader market’s technology-driven losses. 

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Honeywell Technologies Rises 5.70% in First Post-Split Earnings 

Honeywell Technologies advanced 5.70% to $222.38, gaining $11.99, in its first earnings report as a standalone business following the company’s three-way split. The industrial conglomerate raised its full-year 2026 profit forecast, driven by resilient demand for its building automation and industrial products. 

The company’s Building Automation unit saw organic sales rise 9% and orders increase 13%, driven by double-digit growth in data centers, healthcare, and hospitality sectors. The performance reflects Honeywell’s strategic push into high-growth areas including semiconductors and grid infrastructure. 

American Airlines Tumbles 8.35% on Fuel Cost-Driven Profit Warning 

American Airlines Group shares dropped 8.35% to $13.56 after the carrier slashed its full-year profit forecast, citing rising fuel costs amid surging oil prices. The Fort Worth, Texas-based airline now expects 2026 adjusted earnings per share between a loss of $0.65 and a profit of $0.65, down from its prior guidance of between a loss of $0.40 and a profit of $1.10. 

For the current quarter, American expects an adjusted loss per share of $0.70 to $0.10, well below analysts’ expectations of a $0.33 profit. The warning came despite the carrier posting a second-quarter adjusted profit of $0.15 per share on record operating revenue of $16.74 billion, which topped consensus estimates. 

T-Mobile US Sinks 10.77%, Comcast Falls 6.74% on Earnings Disappointment 

T-Mobile US shares plunged 10.77% to $170.38, shedding $20.56, after the wireless carrier’s quarterly results disappointed investors. Comcast tumbled 6.74% to $38.14, extending the telecommunications sector’s decline amid broader market weakness. 

The selloff in telecom names reflected broader investor concerns about capital intensity and competitive dynamics in the wireless and broadband markets, as companies continue to invest heavily in network infrastructure and 5G expansion. 

Roper Technologies Rises 6% to Lead Nasdaq Gainers 

Roper Technologies shares climbed approximately 6% to pace Nasdaq gainers, rising after the tech firm raised its full-year profit and revenue guidance. The Sarasota, Florida-based company now expects 2026 adjusted earnings per share of $22.15 to $22.30, up from its previous outlook of $21.80 to $22.05. 

The company also lifted its revenue growth projection to at least 8% and its organic revenue growth outlook to approximately 6%. For the second quarter, Roper reported adjusted EPS of $5.38 on revenue that increased 9% year-over-year to $2.11 billion, both beating analyst estimates. 

Texas Instruments Drops 3.11%, ServiceNow Falls 3.5% on Earnings Reactions 

Texas Instruments shares declined 3.11% following its earnings report after the close on Wednesday, as the chipmaker’s outlook failed to impress investors despite strong AI-related demand. ServiceNow fell 3.5% after the enterprise software maker reported results, reflecting broader caution around software spending. 

International Business Machines (IBM) ticked higher in Thursday’s session, though the company had lowered its full-year sales outlook after weaker demand for its mainframe business pressured growth. IBM now expects revenue to rise 4% to 5%, compared with its earlier forecast of more than 5%. 

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Norfolk Southern Rallies 5.32% on Merger Speculation and Dividend 

Norfolk Southern shares rallied approximately 5.32% to $348.55, driven by multiple catalysts. The railway operator announced a stable quarterly dividend of $1.35 per share, marking the 15th consecutive quarter at the same level. Additionally, merger speculation intensified with reports that Union Pacific is considering acquiring Norfolk Southern and has reached an agreement with Canadian National Railway, which would withdraw opposition in exchange for expanded track access and terminal assets. 

The stock also traded higher ahead of its upcoming second-quarter earnings report, with analysts forecasting EPS of $3.32. The combination of steady income, M&A speculation, and earnings optimism propelled the shares higher in Thursday’s session. 

Pinnacle Financial Partners Beats EPS Estimates, Stock Rises 0.7% 

Pinnacle Financial Partners reported second-quarter adjusted diluted earnings per share of $2.50, exceeding Wall Street estimates of $2.46. Revenue came in at $1.2 billion, slightly below the $1.24 billion consensus. 

Adjusted EPS grew 25% year-over-year and 5% sequentially. Year-to-date adjusted EPS is up 26% compared to the same period last year. Loans grew $2.9 billion sequentially (14% annualised), while deposits increased by $795 million. Credit quality remained stable with net charge-offs at 22 basis points and non-performing assets at 0.50%. The stock advanced 0.7% in pre-market trading. 

Bitcoin Miners Jump on Digital Infrastructure Narrative 

Bitcoin miners emerged as a bright spot in afternoon trading as investors continued to digest Alphabet’s AI spending plans. Hut 8 jumped 8%, Cipher Digital rallied 6.5%, and Terawulf climbed 4.5%, while Core Scientific gained more than 2%. 

The rally extended beyond AI-exposed names, with pure-play miners following higher. Mara Holdings gained more than 4%, while Riot Platforms and CleanSpark rose 3% each. The move reflects a rerating that increasingly views the group as owners of digital infrastructure rather than merely producers of bitcoin. 

Bullish Sentiment Plunges to 29.6%, Lowest Since September 

Bullish sentiment among individual investors plunged to 29.6% in the latest weekly survey by the American Association of Individual Investors, down sharply from 44.9% last week and the lowest reading since September. The historical average for bullish sentiment is 37.5%. 

The number of bearish investors climbed to 42.3% this week from 32.9% last week, the most since mid-June, while neutral investors rose to 28.1% from 22.1%. The sentiment shift reflects growing anxiety over escalating Middle East tensions, surging oil prices, and concerns about AI spending sustainability. 

Blackstone Gains 1.37% as Q2 Distributable Earnings Jump 26% 

Blackstone Inc shares rose approximately 1.37% after the world’s largest alternative asset manager reported a strong second quarter, with distributable earnings rising 26% year-on-year. The growth was driven by profitable exits across its private equity portfolio and continued strength in asset sales, underscoring improving deal activity and valuations. 

The firm also benefited from strategic investments tied to artificial intelligence, which have begun to generate meaningful returns. Blackstone has been increasing its exposure to AI-linked sectors, positioning itself to capitalise on long-term technological shifts. Investor requests to withdraw from Blackstone’s flagship private credit fund fell at the beginning of the third quarter after a period of higher redemption demand, providing additional support for the stock. 

Also Read: Alphabet Shares Sink Nearly 5% in Premarket Trade On Investor Unease Over AI Spending, Google Fine

PG&E Corp Falls 3.15% Despite Data Center Pipeline Surging to 12.7GW 

PG&E Corp shares declined approximately 3.15% after the California utility reported weaker-than-expected second-quarter revenue, overshadowing a sharp increase in its data center project pipeline. The company’s proposed data center capacity surged to 12.7 gigawatts by the end of June, up from 5.1 gigawatts in March, as demand for AI infrastructure accelerates. 

The growth highlights expanding AI infrastructure demand beyond traditional hubs such as Virginia and Texas. However, while many projects have entered early application stages, only a small number have progressed to actual construction agreements, indicating that most developments remain in planning. The revenue miss weighed on the stock despite the positive pipeline developments. 

Scribe Therapeutics, SPAC Listings and Data Centre Deals Dominate Activity 

The US primary market remained active with a series of IPOs, SPAC listings and public market transactions. Scribe Therapeutics launched a $107.3 million Nasdaq IPO, with strategic backing from Sanofi, Genzyme and Eli Lilly, while Futurewave Acquisition ($86.25 million), Wilco 63 ($230 million), AmperCap Acquisition ($125 million) and Mercator Acquisition ($150 million) completed SPAC offerings on Nasdaq. Ticketplus Ltd. also debuted on the NYSE American. 

Data centre developer TECfusions agreed to go public via a $4 billion SPAC merger with Apex Treasury Corp., while critical minerals company Nth Cycle announced a $585 million merger with Kensington Capital Acquisition Corp. VI for a NYSE listing. Instinct Bio completed its business combination and began trading on Nasdaq under BIOT. Meanwhile, Dyne Therapeutics raised $375 million through an upsized follow-on offering, CAE Inc. shifted its primary listing to Nasdaq, and China Pharma priced a $5 million registered direct offering. 

Investors are now watching Jersey Mike’s Subs, targeting a $1.09 billion NYSE IPO on 29 July, and fashion brand Reformation, which plans to raise $239 million through its NYSE debut on the same day. 

Thursday’s session highlighted the market’s growing intolerance for capital-intensive AI spending without clear profitability timelines, as evidenced by the sharp selloff in Alphabet and Tesla despite strong revenue growth. The divergence between technology losers and defence, industrial, and utility gainers suggests a defensive rotation amid geopolitical uncertainty. Rising oil prices and Treasury yields will continue to pressure growth stocks. Markets will closely monitor further earnings reports and geopolitical developments in the coming sessions. 

Source 

• https://www.nasdaq.com/ 

• spglobal.com/spdji/en/indices/equity/sp-500/ 

• https://www.dowjones.com/