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The tech-heavy Nasdaq plummeted by over 650 points on Wednesday, marking its worst performance of the year. This sharp decline followed the release of quarterly earnings reports from Tesla and Google parent Alphabet that came late Tuesday.
As the ended, the Nasdaq fell 654 points, or 3.6%, while the Dow Jones Industrial Average shed 504 points, or 1.25%. The S&P 500 lost over 2%.
Alphabet reported better-than-expected results, but YouTube advertising revenue fell short of estimates, sending the stock down 5% by the end of the day. Tesla stock declined more than 12% following a 45% drop in profits.
A decline in YouTube ad revenue hurt Alphabet
Google parent Alphabet reported sales of nearly $85 billion for the second quarter on Tuesday, 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.