* Indexes down: Dow 1%, S&P 500 1.4%, Nasdaq 2.4%

* Oil surge reignites inflation worries

* Alphabet falls after hiking FY capex guidance

* Lockheed Martin ( LMT ) gains after lifting 2026 forecasts

(Updates throughout)

By Ragini Mathur and Avinash P

July 23 (Reuters) - U.S. stocks fell to multi-week lows on

Thursday, as disappointing early Big Tech earnings revived

concerns about heavy AI spending, while another jump in oil

prices added to inflation worries.

The tech-heavy Nasdaq led losses, briefly hitting its lowest

level in over two months and falling more than 7% below its

early-June record high. The S&P 500 and the Dow also touched

about one-month lows.

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.

"The concern about spending among these larger technology

companies has been brewing for a while," said Chris O'Keefe,

managing director and lead portfolio manager at Logan Capital

Management.

"Google's capex plans were one of those data points that

really freaked people out, and the fact that cash flow has gone

negative is something investors are circling."

Shares of Google's parent fell 7.3% after the results did

little to reassure investors as attention shifted to its higher

spending plans and its first ever cash burn.

The stock's fall dragged the communication services

sector 5.6% 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.

Other megacap stocks also weakened. Investors will closely

watch capital spending plans from major technology companies

reporting next week, as questions grow over whether massive AI

investments can deliver returns strong enough to justify

elevated 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 vowed "major military

punishment" for Iran and Houthis, after the Yemeni fighters

struck two Saudi oil tankers in the Red Sea.

Brent crude futures rose past $100 a barrel, their highest

level since late May.

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

rose 3.21 points to 19.83, its highest in nearly a month.

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 36% 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 11:55 a.m. ET, the Dow Jones Industrial Average

fell 534.25 points, or 1.02%, to 51,684.33, the S&P 500

lost 101.77 points, or 1.36%, to 7,397.19 and the Nasdaq

Composite lost 620.61 points, or 2.42%, to 25,070.29.

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

also lower mostly. Texas Instruments ( TXN ) fell 3.1% despite

forecasting quarterly revenue above estimates.

Defense giant Lockheed Martin ( LMT ) rose 10.3% after

lifting 2026 sales and profit forecasts.

Thermo Fisher Scientific ( TMO ) jumped 9.8%, as the medical

equipment maker raised its annual profit forecast after beating

estimates for second-quarter results.

Declining issues outnumbered advancers by a 3.18-to-1 ratio

on the NYSE and by a 3.16-to-1 ratio on the Nasdaq.

The S&P 500 posted 17 new 52-week highs and 12 new lows,

while the Nasdaq Composite recorded 35 new highs and 118 new

lows.