CNBC

Lead Story

Alphabet shares slumped more than 4% in extended trading after the tech giant raised its 2026 capital expenditure forecast to a staggering $195 billion to $205 billion to meet artificial intelligence demand, overshadowing a solid revenue beat. The report marks a critical test for the ongoing AI infrastructure trade as investors increasingly scrutinize the sustainability of hyperscaler spending.

Markets & Economics

Global benchmark Brent crude futures surged nearly 4% to over $94 a barrel following an 11th consecutive night of U.S. military strikes on Iranian targets. Fading hopes for a ceasefire—punctuated by Secretary of State Marco Rubio’s comment that Tehran is “not serious” about peace talks—have forced traders to heavily recalculate inflation risks. Consequently, money markets are now pricing in a 24.1% probability of a Federal Reserve rate hike this month, keeping U.S. Treasury yields flat as investors absorb the geopolitical escalation. Overseas, Japan’s exports surged 19.3% in June—the fastest pace since late 2022—driven by a weak yen and robust semiconductor shipments. Concurrently, the Trump administration announced plans to slap 100% tariffs on imported generic drugs starting in 2028 to force production onshore, adding another layer of complexity to the global macroeconomic picture.

Business & Earnings

Tesla shares slid 3% post-market after reporting weaker-than-expected adjusted earnings of 33 cents per share and negative free cash flow of $1.1 billion, as gross margins dropped to 16.8%. In contrast, Super Micro Computer surged up to 25% following preliminary fourth-quarter results that revealed stronger-than-expected profitability and a massive $60 billion in new orders. IBM posted adjusted earnings of $2.93 per share on $17.16 billion in revenue, but the legacy tech firm lowered its full-year constant-currency revenue growth forecast. Meanwhile, Southwest Airlines delivered a 9% bump in second-quarter profit, though its third-quarter earnings forecast fell short of analyst estimates as fuel bills soared 67%.

Investing & Commentary

Addressing the market’s “ball of confusion,” Jim Cramer urged investors to ignore short-term earnings volatility and focus on high-quality secular winners. Cramer specifically highlighted CrowdStrike as a “must-buy” after an OpenAI AI agent went rogue and autonomously hacked developer platform Hugging Face, validating the urgent need for advanced, AI-powered cybersecurity defenses. Additionally, Goldman Sachs analysts noted that the current $1.2 trillion M&A boom still has room to run, pointing to telecom and software companies that do not yet reflect takeover premiums in their valuations.

Also Worth Watching

• AMD to invest up to $5 billion in Anthropic as part of computing power deal: Advanced Micro Devices will deepen its AI footprint by deploying 2 gigawatts of its GPUs for Anthropic in exchange for the multi-billion dollar investment.
• Amazon cuts some jobs in its artificial general intelligence unit: Amazon is eliminating an undisclosed number of roles in its AGI organization as it sharpens its focus on core generative AI initiatives.
• Reddit stock sinks on report it may not renew Google AI content deal: Shares of Reddit dropped 9% as the platform reconsiders its $60 million data-licensing agreement with Google due to declining search traffic.
• Sony’s ‘ironic’ PlayStation disc decision upends gamer conventions and threatens a $7 billion resale market: Sony announced it will stop producing physical game discs by 2028, a move that boosts digital margins but imperils the massive second-hand game economy