Wall St futures subdued as markets digest Alphabet's AI spending plans

U.S. stock index futures were largely muted on Thursday as investors weighed Alphabet's GOOGL.O blowout spending plans against its stellar quarterly results, while Qualcomm dropped after a dour forecast.

Shares of the Google parent, which surged 65% in 2025, slipped 3% in premarket trading after Alphabet unveiled capital-expenditure plans that could nearly double this year, another aggressive step in a bid to stay ahead in the AI race.

Shares of semiconductor and chip equipment stocks moved higher on Alphabet's capex plans.

Broadcom AVGO.O and Lam Research LRCX.O rose 4.5% and 2% respectively, while Applied Materials AMAT.O was up 2.5%.

QualcommQCOM.O slid 11.8% after forecasting second-quarter revenue and profit below estimates, while ArmARM.O dropped 6.5% 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 .SPCY climbed 0.9% on Wednesday, the S&P 500 value index .IVX gained for a fifth straight session, and the S&P 400 mid-cap index .SP400 rose 0.7%.

Amazon AMZN.O shares were mostly flat ahead of results, due after markets 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.

Nvidia NVDA.O will be the last "Magnificent 7" member to post results, on February 25. Its shares were up 1.3%.

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 07:12 a.m. ET, Dow E-minis YMcv1 were up 61 points, or 0.12%, S&P 500 E-minis EScv1 were up 8.75 points, or 0.13%, and Nasdaq 100 E-minis NQcv1 were up 31 points, or 0.12%.

The S&P 500 and the Dow ended lower for a second straight session on Wednesday, as markets questioned 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 .SPLRCIS logged its sixth consecutive decline, erasing roughly $830 billion in market value since January 28.

There have been some pockets of recovery, with Atlassian TEAM.O and Snowflake SNOW.K up 0.8% and 1.6%, respectively, while Palantir PLTR.O rose marginally.

On the earnings front, SnapSNAP.K topped fourth-quarter revenue estimates, lifting its shares 4.2%.

Estee LauderEL.N shares fell 12.2% after the Clinique owner posted second-quarter net sales below expectations. Tapestry TPR.N rose 5.4% after raising its annual adjusted profit forecast, while Hershey HSY.N added 4% after forecasting annual profit above estimates.

With the federal government reopening after a partial shutdown that delayed key economic releases, 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 and Twesha Dikshit in Bengaluru; Editing by Shinjini Ganguli/Reuters