Stocks fell this week as oil, AI spending and earnings hit sentiment

Stocks fell this week as investors weighed a fast move higher in oil, a tougher read on artificial intelligence spending and a busy run of earnings reports. The S&P 500 dropped 0.6% and the Nasdaq Composite lost 2.1%, according to CNBC, giving both indexes a second straight weekly decline.

For retail investors, the week was a reminder that the market can move on several tracks at once. Energy prices fed inflation worries, tech earnings put AI budgets under the microscope, industrial results split along data-center exposure and health-care stocks got company-specific catalysts.

Why did stocks fall this week?

CNBC pointed to four main forces: oil prices, AI capital spending, mixed results from companies tied to data centers and health-care developments. Capital spending, often called capex, means money a company spends on long-term assets such as data centers, chips, factories or equipment.

Oil took the lead after crude prices rose for a third consecutive week amid uncertainty around the Iran war. CNBC reported that U.S. benchmark West Texas Intermediate crude climbed more than 8%, while international benchmark Brent crude rose nearly 10%.

The move began Monday after President Donald Trump warned Iran would pay “many times over” for the deaths of three U.S. service members, according to CNBC. Prices kept rising after Trump again threatened strikes on Iranian bridges and power plants, and Secretary of State Marco Rubio said Tehran was not serious about a deal to end the fighting.

By Thursday, Brent crude moved above $100 a barrel for the first time since before last month’s interim ceasefire agreement between the U.S. and Iran, CNBC reported. The jump followed claims by Houthi militants that they attacked Saudi oil tankers in the Red Sea. Oil eased Friday on hopes that U.S.-Iran peace talks could resume.

Higher oil can matter for stocks because it can raise costs for consumers and businesses, which can keep inflation pressure alive. CNBC said the crude surge helped push the 10-year Treasury yield to its highest level since January 2025. The CME FedWatch tool showed markets pricing a nearly 35% chance of a quarter-point Federal Reserve rate increase, up from 13% a week earlier.

AI spending faces a tougher market test

Alphabet became the week’s clearest example of investors demanding more proof from AI spending. CNBC reported that the Google parent beat revenue and earnings expectations and posted 82% year-over-year growth in Google Cloud, yet its stock fell 7% Thursday.

The pressure came after Alphabet raised its capital expenditure outlook again. Management now expects $195 billion to $205 billion in capex this year and signaled that spending will rise again in 2027, according to CNBC. With free cash flow turning negative, investors focused on whether large cloud companies can turn AI infrastructure spending into enough profit.

Intel showed a different side of the AI buildout. CNBC reported that the chipmaker delivered its strongest quarterly revenue growth since 2011, helped by a 59% increase in data center revenue. Intel also named cybersecurity company Fortinet as its first foundry customer, though CNBC noted that no formal agreements have been announced with other rumored partners, including Apple. Intel closed Friday down nearly 8% and finished the week 3% lower.

Data-center stocks and health care split the tape

GE Vernova shares fell about 8% Wednesday after missing Wall Street’s earnings-per-share estimate, CNBC reported. Earnings per share, or EPS, is profit divided by the number of shares outstanding. CNBC’s Investing Club said the stronger signal was 88% order growth, driven by demand in Power and Electrification, businesses tied to AI data-center power needs. The stock ended the week down about 4.1%.

Dover fell almost 8% Thursday after earnings narrowly beat expectations but revenue missed, according to CNBC. The company has exposure to AI data centers, but those businesses represent about 25% of expected 2026 revenue, CNBC reported. Dover finished the week down 5.6%.

Health care offered a contrast. Eli Lilly shares rose Thursday after encouraging late-stage data for retatrutide, its next-generation obesity drug, and finished the week up 1.4%, CNBC reported. Johnson & Johnson gained 4.1% for the week after the FDA approved its Ottava robotic surgery system earlier than investors expected, giving the company an entry into a market CNBC described as long dominated by Intuitive Surgical.

This story draws on original reporting from CNBC.