Tech Sell-off: Tesla, Alphabet Impact

What happened: On July 26, Alphabet (GOOGL) and Tesla (TSLA) reported earnings. Despite Alphabet beating EPS estimates by 199%, both stocks sold off. Tesla missed EPS estimates by 39%. Both companies burned free cash flow, but Alphabet's funds a growing cash machine while Tesla's signals compressed automotive unit economics. Tesla's stock became the most oversold since March 2025. Alphabet, Microsoft, Amazon, Meta, and Tesla, the biggest AI spenders, fell an average of 9% as investors questioned who pays for AI build-out.

Market impact: Tech stocks, particularly AI-related and growth-oriented names, were hit. The Nasdaq dropped sharply. Investors rotated back into Alphabet, seeking safety. Tesla's stock sell-off pressured EV stocks. The tech-heavy Nasdaq was just off its lows.

What to watch next: Tesla's Q2 delivery rebound sustainability will be tested in upcoming quarters. Alphabet's capex plans will be scrutinized in future earnings. IBM's earnings on August 2 and Intel's on July 28 may provide more clarity on tech spending and AI investment trends.