Feb 5 (Reuters) – U.S. stock index futures were largely muted on Thursday as investors weighed Alphabet’s blowout spending plans against stellar quarterly results, while Qualcomm dropped after a dour forecast.
Shares of the Google parent, which surged 65% in 2025, slipped 2.4% in premarket trading after unveiling capital-expenditure plans that could nearly double this year, another aggressive step in its bid to stay ahead in the AI race.
Shares of semiconductor and chip equipment stocks, however, rose on Alphabet’s capex plans.
Broadcom and Lam Research rose 5.7% and 2.6% respectively, while Applied Materials was up 2.8%.
Qualcomm slid 10.4% after forecasting second-quarter revenue and profit below estimates, while Arm dropped 7% as licensing revenue missed Wall Street expectations.
“Unforgiving scrutiny over AI capex continues to spook investors. What we’re seeing play out this earnings season is … the move from AI as a short-term growth lever to a structural multi-year process,” said Thomas Monteiro, senior analyst at Investing.com.
As traders trimmed exposure to pricey AI winners, money continued to rotate into cheaper, overlooked parts of the market. The S&P 600 small-cap index climbed 0.9% on Wednesday, the S&P 500 value index gained for a fifth straight session, and the S&P 400 mid-cap index rose 0.7%.
Amazon shares were mostly flat ahead of results, due after the close, with investors expected to put its AI spending under the same microscope. Big Tech rivals are widely expected to collectively pour more than $500 billion into AI this year.
After Amazon, Nvidia will be the last “Magnificent 7” member to post results, on February 25. Nvidia shares were up 2.3%.
Investors are increasingly becoming uneasy about how quickly Big Tech can turn massive AI investments into tangible payoffs, and whether current valuations can stay justified.
“The (AI) arms race increasingly becomes less about who has the flashiest model and more about who can keep compounding the funding side,” Monteiro added.
At 05:16 a.m. ET, Dow E-minis were down 36 points, or 0.07%, S&P 500 E-minis were up 9 points, or 0.13%, and Nasdaq 100 E-minis were up 78.25 points, or 0.31%
The S&P 500 and the Dow ended lower for a second straight session on Wednesday, as markets continued debating whether software and cloud companies can withstand what some investors see as an existential threat from artificial intelligence.
The S&P 500 software and services index logged its sixth consecutive decline, erasing roughly $830 billion in market value since January 28.
There have been some pockets of recovery, with Atlassian and Snowflake up 0.7% and 1%, respectively, while Palantir rose 0.8%.
On the earnings front, Snap topped fourth-quarter revenue estimates, lifting its shares 6.3%.
With the partial government shutdown that had snarled key economic releases now over, the U.S. Bureau of Labor Statistics said on Wednesday that January’s jobs report will be released next week. The December JOLTS report, originally due on Tuesday, is expected later in the day.
(Reporting by Pranav Kashyap in Bengaluru; Editing by Shinjini Ganguli)
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