The Nasdaq experienced a significant decline of nearly 3% as both Tesla and Alphabet reported disappointing earnings. This tech sell-off also impacted the benchmark S&P 500 and Dow, leading to a fall in chip stocks.
Tesla's stock slid over 10%, and investors are now awaiting more earnings reports, as well as GDP and inflation data. The decline in tech stocks was seen as an overreaction by some analysts, who believe that the sector will benefit from the AI boom.
Meanwhile, Alphabet's stock fell despite beating revenue and earnings expectations. Guidance about near-term margin pressures from AI and infrastructure led to investor concerns.
Despite strong growth in key segments like Google search and cloud, the stock's long-term trajectory suggests continued margin expansion. Tesla's mixed Q2 results also disappointed investors, with lower-than-expected earnings and a vague outlook on product timelines.
The company has now missed earnings targets for four consecutive quarters, raising questions about its ambitious future plans. Overall, investors are advised to be cautious of stocks with weak fundamentals and high valuations.
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