AI Spenders Bleed $500B While Suppliers and Old Economy Soar

Alphabet and Tesla lost roughly $500 billion in market cap this week as their surging AI capital expenditures overwhelmed free cash flow, wiping out $797 billion from the Magnificent Seven in a single session. In a sharp market divide, hardware suppliers like Micron and Nvidia rallied as investors shifted focus to AI spending beneficiaries. Oil prices fell for the first time in a week, easing inflation fears, while General Motors, UnitedHealth, and Tenet Healthcare delivered standout earnings beats that contrasted sharply with the tech turmoil.

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Google and Tesla lost half a trillion, suppliers cash in The Magnificent Seven suffered a combined $797 billion single-day wipeout after Alphabet and Tesla revealed AI spending that drained free cash flow. In a stark rotation, their hardware suppliers surged 11% on average as investors chased the direct beneficiaries of the capex boom. 1 2 3

Oil prices break their winning streak as crude falls below $100 Brent crude dropped 3.9% to $96.78 per barrel, and WTI fell to $90.12, providing relief to markets after a week of escalating Middle East tensions. The 10-year Treasury yield declined as inflation fears temporarily eased, though tech stocks remained under pressure with the Nasdaq adding to its weekly loss. 4 5

General Motors raises profit outlook on record truck sales GM posted Q2 adjusted earnings of $3.57, crushing the $3.19 estimate, and raised its full-year profit target by $500 million. The gains were driven by record GMC Sierra sales and a 40% jump in North American profits, contrasting with the margin struggles seen at Tesla. 6

UnitedHealth and Tenet Healthcare surge on earnings beats UnitedHealth jumped over 7% after raising its adjusted EPS outlook to $19.50-$20 on cost containment and AI investments. Tenet Healthcare soared 17% on a massive Q2 beat, posting adjusted EPS of $6.12 versus the $4.26 consensus. 7 8

Citi warns US equity positioning faces further pressure Citi strategists cautioned that extreme bullish sentiment leaves the market vulnerable to selling pressure, as investor flows and hedge fund positioning look stretched. The Bank of America Bull & Bear Indicator also flashed its strongest contrarian sell signal since 2021. 5 9

SS&C Technologies rises on record Q2 and massive buyback SS&C Technologies gained 6.2% after reporting record Q2 revenue, raising full-year guidance, and executing its largest-ever quarterly share repurchase of $499 million. 10