Tesla stock inched lower Thursday for one very big reason: Google.
In premarket trading the EV maker's shares were off 0.4% at $402.50. The S&P 500 and Dow Jones Industrial Average futures were down 0.4% and 0.3%, respectively.
Tesla is collateral damage of the soft earnings that Alphabet delivered after Wednesday's market close. The tech behemoth's google search business missed numbers. Alphabet's shares were down 10.8%.
On Thursday, Melius analyst Ben Reitzes had a sobering assessment of Alphabet's numbers: the slowdown isn't temporary, but the start of an erosion of google search.
"We could finally see secular issues rear their head, with a second consecutive quarter of deceleration," he wrote.
Still, google search grew 12% year over year.
"We are defending [Alphabet] stock," wrote Deutsche Bank analyst Benjamin Black on Thursday. "This is largely due to the fact that AI is driving the strongest Search query growth in five years, including commercial queries, while Alphabet is beginning to scale advertising across these new experiences."
Alphabet's numbers are rippling through the AI trade. SpaceX stock was down 1.7%. Tesla and SpaceX stocks are linked by expectations that the companies, both headed by Elon Musk, will merge. SpaceX would pay a premium in an all-stock deal.
Caterpillar shares were also down about 10%. The heavy-equipment maker has become an AI stock because of its power division, which is booming because of the data center buildout.
Cat posted better-than-expected third-quarter numbers, helped by tariff refunds. But it didn't boost guidance -- and that hiccup didn't help with the tech pile-on.
Amazon.com reports its quarterly numbers after Thursday's market close. Maybe the e-commerce giant can turn the rising tide of negative AI sentiment.
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