Brent Surges Past $104 as Hormuz Tensions Flare — Tesla Reverses, TXN Soars 10%, ServiceNow Crashes

U.S. equity futures are pointing to a cautious open on Thursday morning after Brent crude surged past $104 a barrel overnight, reigniting fears that the Strait of Hormuz standoff between the United States and Iran could spark a full-blown energy crisis. The oil shock is overshadowing what was otherwise a strong night of earnings, headlined by Texas Instruments’ blockbuster beat and raised guidance that sent shares soaring more than 10% in premarket trading.

The other side of the coin is ugly. ServiceNow is crashing −13.5% after missing on revenue and reporting a deceleration in billings growth — the latest evidence that the hardware-versus-software divergence we flagged yesterday is deepening. IBM is down −7.4% on a cloud revenue miss and consulting weakness. And Tesla, despite beating on both the top and bottom lines, is reversing its after-hours pop and trading down −2.8% premarket after management warned of elevated capital expenditures tied to the Optimus robot program and the new Terafab manufacturing complex.

With initial jobless claims, existing home sales, and a blockbuster slate of earnings still ahead today — including Intel after the bell — Thursday is shaping up as one of the most consequential sessions of the week.

Pre-Market Snapshot

Overnight Developments

Tesla Beats but Stumbles on Capex Warning

Tesla reported Q1 earnings after Wednesday’s close that topped estimates on both lines: adjusted EPS of $0.41 versus the $0.34 consensus, and revenue of $22.39 billion versus $22.19 billion expected. Deliveries rebounded from a sharp 2025 slump, and EMEA growth was particularly strong with Giga Berlin output hitting record levels.

But the stock, which initially popped 3.3% to $400 in after-hours trading, has completely reversed and is now trading around $377 premarket — down −2.8% from yesterday’s close. The culprit: CEO Elon Musk used the earnings call to outline aggressive spending plans, projecting that Tesla’s Optimus humanoid robot will become the “biggest product ever” with production starting in Fremont later this year. The market is skeptical about the capex ramp at a time when the core auto business faces mounting competition from BYD and European OEMs.

One significant corporate development buried in the noise: Tesla has selected Intel’s 14A chip process for its planned Terafab manufacturing complex, giving Intel its first major customer for its most advanced node. This is a potential game-changer for Intel ahead of its own earnings tonight.

Texas Instruments Delivers a Semiconductor Masterclass

TXN crushed Q1 expectations and raised full-year guidance, sending shares surging more than 10% in premarket to ~$261. The results confirm that semiconductor demand remains robust despite macro headwinds, particularly in the analog and embedded processing segments that serve as a bellwether for broad industrial and automotive end markets.

This is the second consecutive night of semiconductor outperformance following AMD’s 6.7% surge and Broadcom’s 5.1% rally on Tuesday. The hardware side of the AI trade continues to deliver where software is struggling.

ServiceNow and IBM: The Software Pain Deepens

ServiceNow (NOW) is the premarket disaster of the morning, plunging −13.5% to ~$89 after reporting a revenue miss and a troubling deceleration in billings growth. The stock has now lost roughly 60% from its 2025 highs, and the results raise uncomfortable questions about enterprise software spending in an environment where CFOs are prioritizing AI hardware over SaaS subscriptions.

IBM followed a similar script, dropping −7.4% to ~$233 after missing on cloud revenue and reporting continued consulting weakness. The Red Hat integration continues to underwhelm, and the company’s pivot to AI through its watsonx platform has yet to generate meaningful revenue traction.

Oil Shock 2.0: Hormuz Tensions Reignite

The overnight crude surge is the dominant macro risk this morning. Brent crude traded as high as $106.08 before settling around $104.07, up 2.1% from yesterday’s close. WTI is at $95.35, up 2.6%. The Brent-WTI spread has widened to roughly $9, reflecting the geopolitical premium on waterborne crude flowing through the Strait of Hormuz.

The catalyst appears to be escalating US-Iran naval posturing in the strait, with reports of additional US carrier group movements into the Persian Gulf. Trump extended an Iran ceasefire earlier this week, but the military buildup suggests both sides are preparing for contingencies rather than de-escalation.

Global Markets

The oil shock sent ripples across every major global market overnight. Asian indices closed uniformly in the red, while European bourses are trading lower in the afternoon session with only Paris managing a modest gain.

Asia (Closed)

Europe (Live)

The FTSE 100’s underperformance is notable given the UK’s heavy energy weighting — you’d expect oil-heavy London to benefit. But UK inflation data released this week showed CPI rising to 3.3%, driven largely by energy costs, raising fears that the Bank of England will be forced to maintain restrictive rates even as the economy slows. It’s a stagflationary signal that rattled gilt markets and pushed sterling lower.

Macro and Rates

Treasury yields are ticking higher this morning, with the 10-year at 4.30% (+2 basis points) and the 2-year at 3.76% (+2 basis points). The yield curve spread (2s/10s) narrowed slightly to +51 basis points from +54 bps at Tuesday’s close, suggesting the bond market is pricing in modestly slower growth rather than imminent rate cuts.

The dollar is essentially flat, with EUR/USD at 1.1695. Gold is pulling back 0.8% to $4,714 after its relentless rally, though the overnight high of $4,771 shows dip-buyers remain active. Bitcoin is softer at ~$77,500, down 1.6% as the risk-off tone drags crypto lower in sympathy with equity futures.

Corporate News

SoftBank Seeks $10 Billion Loan Backed by OpenAI Shares

SoftBank Group is seeking a $10 billion loan secured by its shares in OpenAI, according to Bloomberg, as Masayoshi Son doubles down on his AI bet. This comes after SoftBank’s massive investment in OpenAI and signals that the AI funding frenzy shows no signs of abating. The move effectively turns OpenAI equity into a leveraged instrument — bullish if AI delivers, potentially destabilizing if it doesn’t.

STMicroelectronics Surges on AI Demand

European chipmaker STMicroelectronics posted a strong first quarter with better-than-expected sales, citing accelerating revenue from AI applications. The stock jumped sharply in European trading, adding another data point to the semiconductor strength narrative.

CATL Unveils Next-Gen EV Batteries

China’s CATL announced next-generation electric vehicle batteries offering 1,500 km of range and 6.5-minute charging times — a technological leap that could reshape the competitive dynamics of the global EV market. This may partly explain why Tesla’s stock is under pressure despite the earnings beat: the competition is not standing still.

Earnings Season Update

With roughly 30% of the S&P 500 now having reported, 85% of companies are beating EPS estimates, according to FactSet. That’s above the 5-year average of 77% and has helped push the index to fresh all-time highs this week. However, the quality of beats matters — and the emerging pattern is clear: hardware and financials are delivering, while enterprise software is stumbling.

Premarket Movers

Economic Calendar

Jobless claims are the more market-moving release today. A number above 225K would reinforce the narrative that the labor market is cooling — potentially supportive for rate-cut expectations but bearish for the broader economy. Existing home sales are expected to decline for the second straight month as mortgage rates hover near 7%, though a surprise to the upside could buoy homebuilder and REIT stocks.

Earnings on Deck

• Before Open: American Express (AXP; EPS est. $3.99, rev est. $18.6B), American Airlines (AAL), Dow Inc (DOW), Southwest Airlines (LUV), Freeport-McMoRan (FCX), Valero Energy (VLO)
• After Close: Intel (INTC; EPS est. $0.01, rev est. $12.4B), Blackstone (BX), Snap (SNAP)

The AlphaEdge Prediction

Thursday is setting up as a tug-of-war between semiconductor strength and the oil-driven risk-off impulse. Here’s how we see it playing out:

Base Case (55% probability): The S&P 500 opens modestly lower, in the 7,090–7,110 range, as the oil shock and Tesla/ServiceNow weakness weigh on sentiment. A mid-morning recovery attempt brings the index back toward 7,120–7,140 as TXN’s semiconductor strength and solid AXP numbers (if they beat) provide support. Markets churn sideways into the close as traders position cautiously ahead of Intel earnings. Predicted range: 7,070–7,150.

Bull Case (20% probability): Brent pulls back from the $104+ level on ceasefire optimism or reduced Hormuz rhetoric. AXP and AAL beat estimates convincingly. Jobless claims come in at 215K or below, signaling labor resilience. Intel pre-positioning lifts the entire chip complex. S&P pushes back above 7,140 and challenges the 7,148 all-time high. Range: 7,130–7,175.

Bear Case (25% probability): Oil spikes further on fresh Hormuz headlines, with Brent testing $108+. Tesla selling accelerates below $370, dragging mega-cap sentiment. ServiceNow contagion spreads to other SaaS names. Jobless claims spike above 230K. The S&P breaks below 7,070 and tests the 7,050 support level. Range: 7,030–7,090.

Our bias is slightly bearish for the session. The oil overhang is real and growing, and while TXN’s beat is impressive, it’s being drowned out by the ServiceNow/IBM software wreckage and Tesla’s premarket reversal. The S&P 500 rallied 1.03% yesterday — some profit-taking is natural. Keep your eye on Brent crude: if it holds above $104, risk appetite will remain suppressed. If it cracks below $100, the bulls could have their opening.