The rising cost of capital for companies today is starting to spook the stock market: 'The worry is the spending might not pay off'

By Isabel Wang and Joy Wiltermuth

Alphabet says it plans to throw even more money at the AI build-out. The Iran war, oil back at $100 a barrel and rising bond yields make it all the more difficult for the market to stomach.

Wall Street got a fresh jolt Thursday from signs that the Iran conflict isn't cooling off, and the fallout is starting to hit the trade that is propping up the entire stock market: artificial intelligence.

Global oil prices (BRN00) surged above $100 a barrel and Treasury yields spiked as investors braced for further escalation with the U.S.-Iran conflict nearing its sixth month. That threatens to torch recent progress on the inflation front, right as the Federal Reserve under its new chair, Kevin Warsh, has renewed its commitment to getting inflation back down to its 2% target.

Yet the pain doesn't stop at the gas pump. It risks striking directly at the heart of the freewheeling money engine that's been funding Silicon Valley's trillion-dollar AI build-out.