Nasdaq Dips Amid Rising AI Costs and Mixed Earnings from Alphabet and Tesla

The Nasdaq Composite took a hit, dropping between 1% and 2% as investors reacted to Alphabet's recent earnings and its announcement of a significant boost in capital spending. The tech giant raised its 2026 capital expenditure forecast to between $195 billion and $205 billion, compared to the earlier estimate of $180 billion to $195 billion. Tesla's own plans to ramp up AI investments added further pressure.

AI Spending Pressures Mount

Big tech players, often called hyperscalers, are on track to pour between $500 billion and $700 billion into AI-related infrastructure this year. Current estimates have climbed beyond $527 billion, up from $465 billion just a few months ago. This surge in spending has weighed heavily on Nasdaq valuations throughout June and July, repeatedly capping gains in technology stocks.

The shift has hit chip manufacturers and large-cap tech names hardest, as investors move funds away from high-growth, high-risk tech bets toward sectors offering steadier returns.

Cryptocurrency Slump Mirrors Tech Selloff

Crypto markets have not escaped the downturn. Bitcoin prices edged down by about 1.8% to approximately $64,800 during the Nasdaq's biggest drops, while Ether slid more sharply, losing around 3% to near $1,870. These declines occurred without any crypto-specific news, reflecting broader risk-off sentiment in markets.

Ether’s sharper fall fits a well-known pattern: it tends to swing more dramatically than Bitcoin in both upward and downward moves when investor risk appetite shifts.

Watching Earnings and Revenue Guidance

As earnings season unfolds, investors are focused on whether AI-heavy companies can justify their higher spending with strong revenue growth, especially in cloud services and advertising. The narrative changes dramatically if increased expenditures come alongside flat or falling revenues.

This dynamic will likely shape tech stock performance in the coming weeks. Those watching the broader cryptocurrency space might find parallels to the swings triggered by shifts in tech market sentiment.