Wall St eyes weaker open on anxiety over Alphabet’s capex; software shares steady

Wall Street looked set to open lower on Thursday as investors fretted over Alphabet's spending plans and Qualcomm's downbeat forecast, although software shares steadied after a bruising selloff this week.

Shares of the Google parent fell nearly 5% in premarket trading after Alphabet said it would double its capital-expenditure plans this year, signaling another aggressive push to strengthen its position in the AI race.

Other mega-caps also came under pressure, with Microsoft, Tesla and Meta shedding 2% each.

Big Tech rivals are widely expected to collectively pour more than $500 billion into AI this year. That spending surge is amplifying growing investor concerns about how quickly Big Tech can translate massive AI outlays into real, measurable returns, and whether lofty valuations can hold up.

"The result is a move away from blind optimism toward profitability, funding discipline and more balanced positioning," said Russell Shor, senior market analyst at Tradu.

Software and data services stocks, including ServiceNow and Salesforce, stabilized after a bruising selloff this week on fears that fast-advancing artificial intelligence tools were starting to dent demand for traditional software businesses.

Amazon slipped nearly 2% ahead of results due after the market closes, with traders poised to scrutinize its AI spending just as intensely.

Nvidia will be the last "Magnificent 7" member to post results, on February 25. Its shares were largely flat.

Qualcomm slid about 10% after forecasting second-quarter revenue and profit below estimates, while Arm dropped 6.5% as licensing revenue missed Wall Street expectations.

Silver miners slid, with the iShares Silver Trust down 12%, after the white metal suffered a 10% plunge. Crypto-linked stocks also sank, with Strategy falling 6.9% and Riot Platforms dropping 5.7% as bitcoin fell below the $70,000 mark.

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%.

At 08:21 a.m., Dow E-minis were down 155 points, or 0.31%, S&P 500 E-minis were down 35.25 points, or 0.51% and Nasdaq 100 E-minis were down 181.5 points, or 0.73%.

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 logged its sixth consecutive decline, erasing roughly $830 billion in market value since January 28.

On the earnings front, Snap topped fourth-quarter revenue estimates, lifting its shares 1.5%.

Estee Lauder shares fell 11% after the Clinique owner forecast annual results below estimates. Tapestry rose 6.2% after raising its annual profit forecast, while Hershey added 3.2% 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.

The number of Americans filing new applications for unemployment increased more than expected for the week ended January 31, data from the Labor Department showed.

(Reporting by Pranav Kashyap and Twesha Dikshit in Bengaluru; Editing by Shinjini Ganguli and Anil D'Silva)