Nasdaq futures fell sharply following the release of quarterly reports from Tesla and Alphabet, which heightened investor concerns about the dominance of major tech companies. Tesla’s shares dropped 6.9% in premarket trading after the company reported its lowest profit margin in the past five years and missed second-quarter earnings expectations. This occurred as the company reduced prices to stimulate demand and increased spending on artificial intelligence projects.

Alphabet, Google’s parent company, also saw a decline of 2.8% after warning of high capital expenditures throughout the year, despite exceeding second-quarter expectations. Senior analyst at Swissquote Bank Ipek Ozkardeskaya noted, “The initial view on Big Tech earnings is not encouraging,” adding that two of the seven largest tech companies failed to generate excitement among investors with their Q2 reports.

Most companies in the so-called “Magnificent Seven” have shown significant growth in 2024 due to optimism around artificial intelligence and the early start of Federal Reserve rate cuts. However, investors are now questioning the high valuations of these companies and are looking at other, less valued sectors. Other major tech companies, such as Apple, Microsoft, Amazon.com, Meta Platforms, and Nvidia, also experienced declines between 0.5% and 2%.