Wall Street Slides as Alphabet’s Soaring AI Spending Overshadows Earnings Beat

(WS News) – Wall Street closed sharply lower this week as investor anxiety over ballooning artificial intelligence spending outweighed a strong round of corporate earnings, dragging all three major indexes into negative territory.

The Dow Jones Industrial Average shed roughly 507 points, or 1 percent, while the tech-heavy Nasdaq Composite dropped 2.2 percent and the S&P 500 slid 1.2 percent. Communications and consumer discretionary stocks bore the brunt of the selling, compounded by surging oil prices tied to escalating tensions in the Middle East.

At the center of the selloff was Alphabet, which reported June-quarter earnings of $9.11 per share, far outpacing analyst estimates of $2.88, on revenue of $103.62 billion that also beat expectations. Yet the strong results were overshadowed after Google’s parent company raised its 2026 capital expenditure forecast to a range of $195 billion to $205 billion, up from a prior estimate of $180 billion to $190 billion. The steeper spending outlook intensified concerns across the market about how much hyperscalers are pouring into AI infrastructure, with Alphabet shares falling roughly 7 percent and Tesla dropping 14 percent following its own earnings release.

The broader earnings season has otherwise been strong, with close to 88 percent of the roughly 66 S&P 500 companies that had reported by midweek beating bottom-line estimates, according to FactSet data. Still, mounting capital expenditure commitments from the industry’s biggest players are testing investor patience, even as markets showed signs of stabilizing Friday morning after oil prices eased back from their highs.