Nikkei Plunges Over 2200 Points as Oil Tops $100 and AI Spending Doubts Spread
- The Nikkei average fell more than 2,200 points intraday on July 24
- Brent crude closed at $100.69 on July 23, back above the $100 mark
- The Nasdaq dropped over 2% overnight on AI overinvestment fears and rising rates
- Alphabet posted 30% operating profit growth, but focus shifted to AI capex
- Reports of OpenAI's huge valuation and losses fed profitability doubts
Two separate shocks arrived at once on July 24. Brent crude, at $86.99 a barrel on July 20, closed at $100.69 on July 23 as Red Sea attacks and Hormuz disruptions escalated—an energy cost shock for import-dependent Japan. Overnight, the Nasdaq fell more than 2% as investors questioned the scale of AI capital spending. The Nikkei absorbed both, dropping over 2,200 points intraday.
The AI doubt is notable for its shape: Alphabet's results were strong, with operating profit up 30%, yet the market fixated on its swelling AI capex. Meanwhile reports highlighting OpenAI's massive valuation against multi-trillion-yen losses put both ends of the AI narrative on trial—profitable firms accused of overspending, unprofitable ones of having no path to returns. That echoes 2000, when the dot-com bust punished capex that outran business models.
For Japan, oil above $100 compounds a historically weak yen: energy is priced in dollars, so corporate cost pressure is heavier than the crude chart alone suggests. The government's new economic white paper warns that higher oil prices squeeze household income through broad price rises—the stock market priced that conclusion in a single session.
Watch whether Brent holds above $100, how AI-related earnings frame capex in the coming weeks, and whether the Bank of Japan acknowledges renewed import inflation. Any of the three could redefine this drop as either a correction or a turning point.