US Stock Trends (July 24): Tesla Plummets 14%, AI Giants Lose $800 Billion Overnight

Written by: TechFlow Research

Tech giants' AI capital expenditure in this round has once again hit a new high. Alphabet's strong earnings report failed to calm market doubts about return on investment, and the Magnificent Seven Index lost nearly $800 billion in market value in a single day. Tesla was the hardest hit, plummeting over 14%, marking the largest single-day drop since March 2025. Q2 net profit missed expectations and gross margin continued to decline. Google fell over 7%, total market cap fell below $4 trillion. Geopolitically, Houthi rebels attacked two Saudi oil tankers with missiles and drones. Brent crude oil once broke through the $100 mark, for the first time in nearly two months. The U.S. 30-year Treasury yield has remained above 5% for multiple consecutive days, setting the longest record since the 2007 financial crisis.

Market Performance

Nasdaq fell 2.15%, S&P 500 fell 1.21%, Dow Jones fell 0.97%. The Tech Magnificent Seven Index fell 4.8%, market value evaporated $797 billion in a single day.

Tesla plummeted over 14%, marking the largest single-day drop since March 11, 2025. The company's Q2 net profit missed expectations, and gross margin further declined. Google fell over 7%, marking the largest single-day drop since May 8, 2025, total market cap fell below $4 trillion.

Storage concept stocks rose against the trend, possibly benefiting from the news of Google increasing AI spending. Micron Technology rose 3.2%, SK Hynix rose 2.56%, SanDisk rose 0.69%.

WTI crude oil settlement price rose 6.17%, closing at $92.19/barrel. Brent crude oil settlement price rose 7.04%, closing at $100.69/barrel, touching a new high in nearly two months. COMEX Gold fell 2%, closing at $4052.3/ounce. COMEX Silver fell 3.99%, closing at $57.895/ounce.

Bitcoin opened at $66081.05 on the day, down 0.6% from the previous day, intraday once fell back to $65054.55. Ethereum opened at $1933.32, up 0.3%, intraday also fell to $1899.38.

Macro and Outlook

Tesla's problem this time is more serious than the market expected. Revenue figures themselves are not bad, up 26% year-over-year, but what truly scared investors is the significant shrinkage in profits, plus the first net cash outflow in two years. The company's explanation is that it is currently hitting the most intense expansion period since its founding. Spending on AI and robotics alone reached $5.8 billion in one quarter. Whether this reason can convince the market, the cash flow performance in the next few quarters will give the answer.

Alphabet's situation is consistent with the judgment disclosed the day before. Revenue and cloud business growth rates are very bright, but free cash flow turned negative for the first time in history. The full-year capital expenditure cap was raised to $205 billion. This earnings report failed to dispel market doubts about the sustainability of AI spending, but instead let worries ferment further. Google's intraday drop once expanded to over 7%.

Some analysts made an analogy, saying the market hasn't given up on AI itself yet, but the days of willing to buy based on beautiful promises are gone. Now it's time for management to take responsibility themselves. In the next few earnings conference calls, what everyone really wants to hear is how much cash every dollar spent can bring back. Who has time to listen to you envisioning scenarios ten years later.

The scale of debt financing by tech giants for AI infrastructure has exceeded $500 billion. This batch of new long-term bonds and U.S. Treasury bonds are competing for the same buyers, directly pushing up already high long-end interest rates. The 30-year U.S. Treasury yield has remained above 5% for multiple consecutive days, setting the longest record since the 2007 financial crisis.

Some fund managers mentioned that whether it is the government, cloud computing giants, or other bond issuers, everyone is now grabbing money in the same pool. Traditional buyers like pension funds and insurance companies have more choices, so their interest in Treasury bonds naturally fades.

This financing wave, superimposed on the background of the U.S. Treasury bond market size expanding from $4.5 trillion in 2007 to $31 trillion now, and the debt-to-GDP ratio breaking 100%, means long-end interest rates are difficult to loosen in the short term.

Geopolitically, Yemeni Houthi rebels used ballistic missiles, cruise missiles, and drones to attack two Saudi oil tankers. One ship's bow was hit and caught fire, but fortunately the crew were all safe. The incident location is near the Bab el-Mandeb Strait connecting the Red Sea and the Gulf of Aden. This waterway itself is a lifeline for global crude oil exports.

Plus the confrontational atmosphere between the U.S. and Iran that has never stopped. The two things together, market panic about whether the supply chain will really break was instantly ignited. Brent crude oil rose over 7% on the day, once touching the $100 mark.

Trump also stated on the day that he is 'seriously considering' launching larger-scale military action against Iran.

Regarding trade, the U.S. Trade Representative Office, citing 'forced labor', announced imposing additional tariffs of 10% to 12.5% on dozens of countries and regions, to replace the global import tariffs about to expire. The new tax takes effect from the 24th.

The last suspense of this week falls on Intel. The company will also announce earnings on Thursday. The focus of market attention, like other tech giants in recent days, is capital expenditure guidance. Next week it will be Microsoft, Meta, and Amazon's turn to report. These giants' latest statements on AI investment will determine how far this round of valuation reassessment will go.

TechFlow Perspective

What was truly broken this day is a default assumption. The market was previously willing to give AI narratives a large imagination space, but now this space is being rapidly compressed by realistic cash flow numbers. The common problem for both Tesla and Alphabet lies in the speed of spending has clearly exceeded the speed of making money. Investors expressed their attitude with real money sell-offs.

The counter-trend rise of storage chip stocks provides an important reference. Also in the AI main line, capital is still willing to pay for companies with visible orders and visible cash flow conversion paths, just increasingly impatient with purely pie-in-the-sky parts. This divergence is highly likely to continue in the short term. Intel and the earnings reports of several cloud vendors next week will be the next touchstone.

Neither long-end interest rates nor oil prices are likely to loosen in the short term. The former is a structural result of the AI infrastructure debt surge, the latter is a direct product of repeated escalations in geopolitical conflicts. These two macro variables superimposed together means that even if individual companies' earnings reports can give satisfactory answers, it is difficult for the valuation environment of the entire market to truly relax in the short term.