U.S. Stocks Slide as AI Spending Fears and Oil Surge Weigh on Markets

U.S. equities fell sharply on Thursday as investors reassessed the cost of the AI race and rising geopolitical risks pushed oil prices higher.

The Nasdaq led the selloff, falling more than 2% and briefly touching its lowest level in over two months. The S&P 500 and Dow Jones also declined as sentiment weakened across major sectors

Key developments:

• Alphabet dropped over 7% after increasing its capital expenditure outlook, raising concerns about the scale of AI infrastructure spending despite strong revenue growth.

• Tesla plunged more than 12% after reporting negative free cash flow, adding to worries over profitability among mega-cap tech companies.

• Brent crude climbed above $100 per barrel, its highest level since late May, fueling fresh inflation concerns.

• The CBOE Volatility Index (VIX) rose to nearly 20, reflecting increased market uncertainty.

• CME FedWatch data showed markets raising the probability of a July Federal Reserve rate hike to around 36%, up significantly from the previous week.
Meanwhile, Lockheed Martin gained after lifting its 2026 outlook, highlighting continued strength in the defense sector as geopolitical tensions remain elevated.
Markets are now closely watching upcoming earnings from other AI leaders to determine whether massive infrastructure investments can deliver returns that justify current valuations
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