* Indexes down: Dow 1%, S&P 500 1%, Nasdaq 1.7%

* Oil surge reignites inflation worries

* Alphabet falls after hiking FY capex guidance

* Lockheed Martin ( LMT ) gains after lifting 2026 forecasts

* ServiceNow ( NOW ) jumps as co raises annual subscription revenue

forecast

(Updates after markets open)

By Ragini Mathur and Avinash P

July 23 (Reuters) - U.S. stock indexes hit multi-week lows

on Thursday, as concerns over heavy AI spending resurfaced after

the first batch of Big Tech earnings, while oil prices touched

the $100-a-barrel mark following the widening Middle East

conflict.

Second-quarter results from Alphabet and Tesla

, the first of the so-called "Magnificent Seven" megacap

companies to report this season, failed to impress investors.

Shares of Google's parent fell 6.4% after the results did

little to reassure investors as attention shifted to its higher

spending plans.

"Alphabet is spending hundreds of billions of dollars as it

looks to stay ahead in the AI arms race," said AJ Bell

investment director Russ Mould.

"But there is still a healthy degree of scepticism about the

ability of these investments to generate a commensurate level of

return."

The stock's fall dragged the communication services

sector 4.4% lower, leading sector-wise losses on the

benchmark S&P 500.

Tesla dropped 12.2% after reporting negative free cash flow

for the second quarter for the first time in more than two

years.

Capital spending plans will remain in focus when other major

technology companies report next week, as investors question

whether the huge sums being poured into AI are translating into

meaningful returns, and if profit growth can justify elevated

stock valuations.

Geopolitical concerns added to the pressure. After months of

investor focus on the Strait of Hormuz, attention has shifted to

the Red Sea, where Iranian-aligned Houthis, who control areas

near the Bab el-Mandeb strait, have opened a new front in the

Middle East crisis.

U.S. President Donald Trump said he would hold Iran

accountable for any attacks by Yemen's Houthi militants.

Brent crude futures briefly rose to $100 a barrel, their

highest level since late May.

Wall Street's fear gauge, the CBOE Volatility Index,

rose 2.15 points to 18.79 after three consecutive days of

declines.

The surge in oil prices revived inflation worries, pushing

interest-rate-sensitive 2-year Treasury yields to a 17-month

high as traders increased bets on a Federal Reserve rate hike as

early as next week.

Markets are now pricing in about a 38% chance of a

25-basis-point increase at the Fed's July meeting, up from 12% a

week ago, according to CME's FedWatch tool.

The number of Americans seeking unemployment benefits for

the first time fell sharply last week, leaving Fed officials to

keep their focus on containing inflation.

At 9:54 a.m. ET, the Dow Jones Industrial Average

fell 504.86 points, or 0.97%, to 51,713.72, the S&P 500

lost 70.92 points, or 0.95%, to 7,428.04 and the Nasdaq

Composite lost 433.12 points, or 1.69%, to 25,257.79.

Chip stocks, which have recently hit a volatile patch, were

mixed. Texas Instruments ( TXN ) fell 3.2% despite forecasting

quarterly revenue above estimates.

Defense giant Lockheed Martin ( LMT ) rose 11.1% after

lifting 2026 sales and profit forecasts.

ServiceNow ( NOW ) gained 2% after the enterprise software

company raised its annual subscription revenue forecast for the

second time.

Declining issues outnumbered advancers by a 2.72-to-1 ratio

on the NYSE and by a 2.2-to-1 ratio on the Nasdaq.

The S&P 500 posted 15 new 52-week highs and eight new lows,

while the Nasdaq Composite recorded 30 new highs and 68 new

lows.