US stocks fell on Thursday as cash burn at Alphabet and Tesla spooked investors, dragging the S&P 500 down 1.5%. A jump in oil to $100 a barrel and rising bond yields added to the pressure across markets.
Big Tech cash burn drags the index lower
The S&P 500 lost 1.5% on Thursday after Alphabet and Tesla — the first two of the so-called “Magnificent Seven” megacaps to report this season — burned through cash on AI infrastructure. The Dow Jones fell 1% and the Nasdaq Composite slid around 2.7% alongside it.
Tesla shares tumbled 14% after posting their first cash burn in two years. Alphabet fell about 7% after the Google parent also burned through cash and said it would raise AI spending by another $15 billion to $200 billion for the year. Investors had rewarded these hyperscalers with lofty valuations on expectations of big revenue gains, but some are now outspending their operating cash flow.
According to Reuters, BlackRock’s Rick Rieder wrote that AI’s “near-term investment story is becoming more nuanced”. Charu Chanana, chief investment strategist at Saxo, called it an AI-return problem rather than an AI-demand one.
Oil at $100 revives inflation fears
Brent crude jumped nearly 7% to $100.5 a barrel, its first time at that level since late May, after attacks on tankers in the Red Sea choked off a Middle East supply route. The oil spike stirred fresh inflation worries.
Benchmark 10-year US Treasury yields climbed to their highest since January 2025 on Thursday. Traders now price in 42 basis points of Fed rate hikes for the year, with a September move fully expected. Investors’ attention stays on capital spending plans ahead of next week’s earnings from Microsoft, Meta and Amazon.
Sources: Reuters via Yahoo Finance, Reuters via Investing.com
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