Dow slips 45 points as Alphabet tumbles, AI stocks keep rally alive

US stocks opened lower on Tuesday as investors assessed fresh record highs on Wall Street, monitored developments in US-Iran negotiations, and reacted to major announcements from technology companies tied to the artificial intelligence boom.

The Dow Jones Industrial Average fell 45 points, or 0.1%. The S&P 500 slipped 0.13%, while the Nasdaq Composite declined 0.26%.

The pullback came after the major US indexes reached new record highs on Monday, supported by continued enthusiasm for artificial intelligence-related investments.

Alphabet shares slide after AI funding announcement

Alphabet shares fell more than 4% in trading after the company announced plans to raise $80 billion through stock sales to finance the expansion of its artificial intelligence infrastructure.

The funding package includes a $10 billion investment from Berkshire Hathaway.

Although the stock initially rose in after-hours trading following the announcement, sentiment later turned negative as investors weighed the implications of the capital raise.

Despite pressure on Alphabet, broader enthusiasm surrounding artificial intelligence remained intact.

AI-linked stocks continue to attract investor interest

Several technology companies posted strong premarket gains as investors focused on demand for AI infrastructure and data center products.

Hewlett Packard Enterprise surged about 32% after reporting strong results, pulling forward its long-term financial targets by two years, raising full-year guidance, and issuing a stronger-than-expected outlook for the current quarter.

The company's second-quarter performance marked its largest earnings beat since 2018.

The upbeat outlook lifted shares of industry peers. Super Micro Computer gained 8.6%.

Marvell Technology jumped more than 19% after Nvidia Chief Executive Jensen Huang identified the company as a potential future technology giant.

“When you take a computing problem, and you disaggregate it into a lot of parts, and you distribute it across the entire data center, what’s necessary is connectivity,” Huang said. “That’s the reason why Marvel is so essential.”

Huang also described Marvell as a potential “trillion dollar company” during remarks at Computex in Taipei.

Meanwhile, Nvidia shares gained more than 1% in trading, extending momentum after rising more than 6% on Monday following the launch of a new AI-focused personal computer processor.

Middle East developments remain in focus

Investors also continued to monitor geopolitical developments in the Middle East.

Oil prices fell slightly on Tuesday on hopes of an end to the US-Iran conflict and the reopening of the Strait of Hormuz. 

Crude had surged on Monday after Iranian state media reported that Tehran would halt indirect communications with the United States and move to fully block the Strait of Hormuz.

The report stated that “no dialogue will take place” until Israel ends military operations in Lebanon and Gaza and withdraws from occupied areas in Lebanon.

President Donald Trump responded by telling CNBC that he “couldn’t care less” if peace negotiations with Iran had ended.

Later, Trump said he “had a very productive call” with Israeli Prime Minister Benjamin Netanyahu and added that talks with Iran were “continuing, at a rapid pace.”

Market participants are also awaiting US job openings data and Friday’s closely watched employment report, while comments from Cleveland Federal Reserve President Beth Hammack could provide additional clues about the outlook for interest rates.

Although geopolitical tensions remain a concern, many investors continue to focus on strong earnings results and accelerating AI-related spending as the primary drivers of market sentiment.