Wall Street falls as tech earnings spark AI spending worries

Wall Street stocks plummeted on Thursday with the Dow dropping about 1 percent, the S&P 500 shedding 1.2 percent and the Nasdaq tumbling more than 2 percent. The latest earnings results from large tech companies such as Alphabet and Tesla revived concerns about heavy AI spending, says Keith Buchanan, senior portfolio manager for Globalt Investments. We're at a point now where the hype has to kind of meet some level of realistic expectation, quantifiable expectation. And the markets are starting to digest just what this means to cash flow in some of the largest companies in the world going forward. And a lot of the spending is eating into cash flow in a way that's making investors lose a bit of comfort and question a lot of valuations that have grown over the past couple of years. And that's what's really at the root of what's really hampering some of the market returns today and giving back some of the gains that we've gotten for the market over the past couple of weeks. Shares of Alphabet sank 7 percent after the tech giant reported higher spending plans while it also burned cash. And shares of Tesla tumbled 14.5 percent after Elon Musk's EV maker reported negative free cash flow in the second quarter for the first time in more than two years. But shares of Intel rose 10 percent in extended trading after the company forecast quarterly profit and revenue above Wall Street estimates as an AI data center build-out increases demand for its central processing units, or CPUs. Meanwhile, Brent crude oil futures settled above $100 a barrel for the first time since May, and U.S. oil futures settled above $92. The surge in oil prices prompted worries about inflation ahead of next week's Federal Reserve policy meeting.