Alphabet and Tesla delivered earnings that highlighted a growing divide in the AI investment cycle. Although Alphabet exceeded both consensus and market expectations, its quarterly free cash flow turned negative as capital expenditure guidance increased sharply. Tesla also posted negative free cash flow while signaling even heavier spending on AI, robotaxis and humanoid robots. $GOOG $TSLA
Ordinarily, such aggressive AI investment would be expected to boost semiconductor stocks, as chipmakers benefit directly from rising infrastructure spending. Instead, semiconductor shares weakened in early trading, suggesting investors may be reassessing the sector despite continued demand. Texas Instruments also fell after reporting earnings that beat consensus but failed to match elevated whisper expectations, while Intel’s results later today will provide another important read on semiconductor sentiment. $TXN $INTC
Geopolitical tensions are adding to market uncertainty. Houthi attacks on oil tankers in the Red Sea have opened a new front in the Middle East conflict, prompting President Trump to warn of significant military retaliation against both the Houthis and Iran. Brent crude is approaching $100 per barrel while U.S. benchmark WTI has climbed above $90, raising concerns that higher energy prices could reignite inflation.
Meanwhile, stronger-than-expected jobless claims point to a resilient labor market despite ongoing AI-driven layoffs, increasing expectations that the Federal Reserve may need to raise interest rates. The European Central Bank left rates unchanged. $SOXL
