Tesla and Google's AI spending triggers tech sector sell-off
Technology stocks faced a sharp decline on July 23, 2026, as heavy investments in artificial intelligence by Tesla (TSLA) and Alphabet Inc. (GOOG) raised concerns among investors about profitability. Tesla’s shares dropped over 12%, marking one of its largest declines ever, while Alphabet fell nearly 7%. The sell-off was exacerbated by rising oil prices that increased expectations for interest rate hikes. Investor anxiety has been fueled by the high costs associated with AI development and uncertainty around returns on these investments. This concern is compounded by the emergence of Kimi K3, a more affordable Chinese AI model posing competition to U.S.-based alternatives. Tesla’s profits also declined due to aggressive discounts on vehicles and reduced revenue from regulatory credits following policy changes under Donald Trump. Alphabet warned it could spend over $200 billion this year on AI infrastructure, up sharply from earlier forecasts. The company reported negative cash flow for the first time in its public history during Q2 2026.
Topics: AI spending Alphabet performance stock price drop Tesla earnings