Major indexes fall sharply amid rising oil prices and concerns over escalating AI infrastructure costs at Tesla and Alphabet.
U.S. equities declined broadly Thursday as oil prices topped $100 and investors reassessed the financial toll of AI expansion. The Nasdaq Composite dropped 2.6%, while the S&P 500 and Dow Jones Industrial Average fell 1.4% and 1%, respectively, by midday trading.
Tesla shares plunged 14.2% after missing earnings estimates despite a 25% revenue increase to $28.2 billion. Earnings per share came in at $0.33, below the $0.49 consensus, as auto gross margins contracted to 16.3%. Alphabet declined 7% despite beating revenue forecasts with $119.8 billion in sales, driven by an 82% surge in Google Cloud revenue. Both companies flagged higher capital expenditures, with Tesla projecting over $25 billion for AI and robotics infrastructure.
The market reaction underscores investor unease over rising costs tied to AI development, even as demand for cloud services grows. Oil’s rally, fueled by geopolitical tensions, added to broader economic concerns.