Key Highlights

  • The Dow fell 1%, the S&P 500 lost 1.5% and the Nasdaq dropped 2.7%.
  • Tesla slid 14% on its first cash burn in two years.
  • Alphabet fell about 7% after lifting 2026 AI capex guidance to as much as US$205 billion.

US equities fell sharply as disappointing technology earnings combined with a spike in oil prices. The Dow Jones Industrial Average slipped 1%, the S&P 500 lost 1.5% and the Nasdaq Composite dropped 2.7%, led lower by heavy declines in Alphabet and Tesla after both reported large cash outflows tied to artificial intelligence spending.

Tesla posts its first cash burn in two years

Tesla shares fell 14% after the company reported its first cash burn in two years. The result drew attention to the rising cost of the company's AI and infrastructure commitments at a time when investors are increasingly focused on free cash flow rather than headline growth.

A single-day move of this size reflects how sensitive richly valued technology names have become to any sign that heavy spending is not yet translating into cash generation.

Alphabet lifts its capex guidance

Alphabet fell about 7% after raising its 2026 AI capital expenditure guidance to as much as US$205 billion. The scale of the planned outlay reframed the earnings report around spending discipline.

Markets have grown wary of open-ended AI investment programmes, particularly where the payback period is unclear. Higher capex guidance, even when framed as a growth investment, can compress near-term cash flow expectations and weigh on the share price.

The oil overlay

The earnings-driven selling was amplified by the same energy shock rattling other markets. Rising oil prices lift input costs and inflation expectations, which in turn pressures the valuations of long-duration growth stocks whose worth rests heavily on future earnings.

Technology names carrying large AI spending commitments sit at the intersection of both concerns, which helps explain why the Nasdaq underperformed the broader indices.