Tesla (TSLA) and Alphabet NASDAQ:GOOGL shares led a broad market selloff on Thursday after investors reacted to higher artificial intelligence spending, sending the Nasdaq Composite down about 2.5% and the S&P 500 lower about 1.5%, while rising Middle East tensions pushed Brent crude close to $100 a barrel.
Tesla fell about 12% after reporting quarterly earnings that missed profit expectations despite stronger revenue, while Alphabet dropped roughly 7% after lifting its 2026 capital expenditure outlook to as much as $205 billion. The decline weighed on major indexes, with other large-cap technology stocks also trading lower.
Alphabet said it plans to increase spending on AI infrastructure as demand for computing capacity continues to grow. Separately, the company also faced a roughly $1 billion European Union fine tied to its search business, adding to investor concerns.
Oil prices extended recent gains after reports that Iran-backed Houthi forces attacked two Saudi oil tankers. Brent crude climbed more than 6% to nearly $100 per barrel, while U.S. benchmark West Texas Intermediate rose about 5%.
Higher energy prices also lifted Treasury yields as investors reassessed inflation and interest-rate expectations. The yield on the benchmark 10-year Treasury note rose to its highest level since January 2025, while traders increased expectations for potential Federal Reserve rate hikes over the coming months.