Key points
- Stocks opened lower Thursday and stayed there. Tesla (TSLA) extended its loss to around 12% and Alphabet (GOOGL) to close to 7%, both worse than their premarket levels, with no repeat of Wednesday's opening-bell bounce.
- The rest of the AI trade didn't follow them down. Chipmakers, neocloud names and photonics stocks like Applied Optoelectronics and Super Micro Computer were broadly green, some up more than 4%.
- Oil topped $100 a barrel for the first time since May after Trump threatened to bomb an Iranian bridge or power plant for every future attack on shipping.
- Lockheed Martin beat earnings and jumped more than 11%, while weekly jobless claims fell to a 2026 low of 187,000.
Stock futures were pointing sharply lower ahead of Thursday's open, and the selling never really stopped once trading started. Tesla (TSLA) and Alphabet (GOOGL) reported Wednesday night, and both topped Wall Street's revenue targets. Their stocks sold off anyway. Tesla was down around 12% by mid-morning and Alphabet close to 7%, each deeper than its premarket decline. The reason has less to do with what either company made last quarter than with what they plan to spend next. Major indexes felt it too: the S&P 500 and Dow were both off close to 1% a half hour into the session, and the Nasdaq-100, tracked through the Invesco QQQ Trust (QQQ), fell a bit further than that. Oil piled on as the morning wore on, with Brent crude clearing $100 a barrel for the first time since May after President Trump threatened new strikes on Iran.
Tesla's headline number was good. The details weren't.
Tesla's revenue told a good story: $28.24 billion, up 26% from a year earlier, above the $26.4 billion Wall Street expected. That's where the good news stopped.
- Adjusted earnings of $0.33 a share, well short of the $0.51 expected.
- GAAP operating income down 57% year over year to $398 million.
- Operating margin narrowed to 1.4%.
Even the $1.11 billion in net income leans on a one-time boost: a $1.005 billion unrealized gain on Tesla's stake in SpaceX, which the company strips out of its adjusted numbers. Take that gain away and the profit picture looks thinner than the revenue headline suggests. None of it helped the stock. It kept falling after the open and was down around 12% by mid-morning, worse than where it sat in premarket trading.
Alphabet's cloud business is booming. So is its spending.
Alphabet had one of its stronger quarters in years by most measures. Total revenue rose 24% year over year to $119.8 billion. Google Cloud revenue grew 82% to $24.8 billion, an acceleration analysts weren't expecting. None of that mattered much to the stock. Alphabet spent $44.9 billion on property and equipment in the quarter alone, and raised its full-year 2026 capital spending guidance to $195 billion to $205 billion, up from $180 billion to $190 billion just three months ago. It's the third time this year Alphabet has raised that number. Free cash flow came in negative $5.9 billion for the quarter as a result. Shares fell as much as 5% in extended trading Wednesday and were down close to 7% by mid-morning Thursday, deeper than the premarket decline. We covered the capex raise itself in more detail here, including why chip suppliers like Nvidia and Broadcom barely reacted.
The rest of the AI trade doesn't agree with Alphabet's stock price
If AI spending fear were spreading through the market broadly, the stocks that build the infrastructure would be falling too. They aren't.
- Photonics and optical networking: Applied Optoelectronics (AAOI) up more than 4%, Lumentum (LITE) up close to 4%, Ciena (CIEN) and Coherent (COHR) both up more than 3%.
- Neoclouds renting out AI compute: Nebius (NBIS) up more than 3%, IREN up more than 2%, CoreWeave (CRWV) and Applied Digital (APLD) both up more than 1%.
- Chip supply: Micron (MU) up more than 3% and Super Micro Computer (SMCI) up more than 4%, while Nvidia, Broadcom and Taiwan Semiconductor Manufacturing Company (TSM) sit roughly flat to slightly lower.
That split says something narrower than "the market is scared of AI spending." Money is still moving into chips, optical gear and rented compute capacity without much hesitation. Whether Alphabet is getting enough back for spending nearly $50 billion a quarter is one worry. Whether Tesla can fund its own AI and robotics push without squeezing an already thin margin further is another. Google Cloud growing 82% while free cash flow stays negative is a number that could mean the investment is working, or that it hasn't paid off yet. This morning, for these two stocks, Wall Street picked the second read.
Not every stock is red, and one is up sharply
The selloff isn't universal, and Lockheed Martin (LMT) is the clearest example. The stock kept climbing after the open, up more than 11% by mid-morning, on a real beat: $7.94 a share against the $7.20 or so Wall Street expected, and $20.1 billion in revenue against a consensus near $19.4 billion. We wrote about why Lockheed looked due for a bounce heading into this report. ServiceNow (NOW) beat too, adjusted earnings of $0.90 a share versus $0.85 expected on revenue of $3.99 billion versus $3.93 billion expected, but the stock gave back most of its premarket pop and held onto only about a 2% gain by mid-morning. IBM tells a quieter story. It crashed 25% on a preannounced miss back on July 14, gained after its full results landed Wednesday night, and was little changed Thursday, still finding its footing.
Oil is surging even further after Trump's bridge threat
Trump escalated his warnings to Iran on Wednesday, threatening to destroy Iranian infrastructure for every future attack on shipping. "From this point forward, any time the Islamic Republic of Iran shoots at a ship in the Strait of Hormuz, whether it be by missile, rocket, drone or any other device or weapon, the United States will bomb and destroy ONE BRIDGE OR POWER PLANT, including those located next to, or in, the capital city of Tehran," he wrote. US Central Command said overnight that American forces had completed a 12th consecutive round of strikes on Iran, and Trump said Thursday he's disappointed in Yemen's Houthi movement for hitting two Saudi tankers, the Encelia and the Layla, in the Red Sea, and vowed to punish both the Houthis and Tehran if it happens again.
Oil took that as a reason to keep climbing well past where it stood at the open. Brent crude topped $100 a barrel for the first time since May, up more than 6% on the day. West Texas Intermediate rose more than 5% to above $91. The US national average for gasoline has already risen to $4.09 a gallon, up from $3.94 a week earlier, and higher crude typically shows up at the pump with a lag. The 10-year Treasury yield climbed toward 4.67%, its highest level since May, as investors price in the extra inflation risk from pricier oil. We've covered this conflict's earlier escalations, including Wednesday's oil spike and tariff news.
Stocks opened lower and stayed there
Wednesday's pattern didn't repeat. That day, futures sank close to 1% before the bell and the market clawed almost all of it back within the first half hour of trading. Thursday's open was flatter and stayed that way: the S&P 500 and Dow were both down close to 1% a half hour in, the Nasdaq-100 was off a bit more, and none of the three showed much sign of a bounce. The difference from Wednesday is the one we flagged heading into the open: this selloff is tied to specific earnings numbers investors have to sit with for the rest of the quarter, not a headline scare that can fade as fast as it hit. The strong jobless claims report, a 2026 low of 187,000, hasn't been enough on its own to turn sentiment around, and the fresh escalation in the Iran conflict gave the market another reason to stay cautious instead.
Sources
- Tesla Investor Relations, second-quarter 2026 results, July 22, 2026
- Alphabet Investor Relations, second-quarter 2026 results, July 22, 2026
- CNBC, Trump holds Iran responsible for Houthi attacks, July 23, 2026
- Forbes, Red Sea tanker attacks and oil prices, July 23, 2026
- PR Newswire, Lockheed Martin Q2 2026 results
- Quartz, weekly jobless claims, July 23, 2026
- Real-time TSLA, GOOGL, NOW, LMT, IBM, SPY, QQQ, DIA, NVDA, AMD, AVGO, TSM, MU, SMCI, CRWV, NBIS, IREN, APLD, AAOI, COHR, LITE, POET, CIEN and index quotes via Robinhood market data, July 23, 2026, mid-morning
- Related coverage: Wednesday's Nasdaq-100 futures dip and recovery
- Related coverage: Alphabet's third capex raise of the year
- Related coverage: Why Lockheed Martin looked due for a bounce
This is general market commentary and opinion, not investment advice. Prices can move significantly, or reverse again, as the trading day continues. Markets can go down as well as up, and you can lose money. Always do your own research and consider speaking with a licensed financial professional before making any investment decision.
