The tech-heavy Nasdaq dropped almost 450 points on Wednesday morning after quarterly earnings results from Tesla and Google parent Alphabet late Tuesday. Nasdaq fell 440 points, or 2.4%, after the market opened, while the Dow Jones Industrial Average shed 343 points, or 0.85%. The S&P 500 lost 1.6%.
Alphabet reported better than expected results, but YouTube advertising revenue fell short of estimates, sending the stock down 4.5% in the morning Tesla stock declined more than 10% on Wednesday following a 45% drop in profits.
A decline in YouTube ad revenue hurt Alphabet
Google parent Alphabet on Tuesday reported sales of nearly $85 billion for the second quarter, surpassing Wall Street’s expectations by about $640 million, according to FactSet consensus estimates.
Advertising revenue exceeded analysts’ expectations, reaching $64.6 billion, up from $58.1 billion last year. However, YouTube ad revenue fell short at $8.66 billion, missing expectations of $8.95 billion.
Earnings from Tesla disappointed investors
Tesla’s earnings report missed Wall Street’s expectations and took a 45% hit to profits. The Austin, Texas-based automaker reported net income of $1.5 billion for the April to June quarter, down from $2.7 billion a year earlier. However, revenue hit $25.5 billion, a 2% increase compared to last year and above the $24.5 billion expected by Wall Street. That was thanks to growth outside the electric vehicle business, namely Tesla’s energy sector.
Automotive revenue fell 7% compared to a year earlier after the company delivered 443,956 units during the quarter, down almost 5% from 2023. While a better result than analysts had expected — and a major boon for the stock — those sales came at the cost of margins.
—William Gavin and Laura Bratton contributed to this article.