Nasdaq futures slump ahead of Big Tech earnings: 5 things to know before market opens

• Alphabet's earnings test centers on Google Cloud growth and whether AI capital expenditure is translating into faster revenue, with cautious spending signals potentially hurting chip suppliers dependent on hyperscaler demand.
• Tesla delivered 480,126 vehicles in Q2 but faces scrutiny on automotive margins, free cash flow, and costs of expanding robotaxi, AI, and humanoid-robot programs.
• Super Micro Computer surged after raising Q4 gross margin guidance to 15-17% (nearly double prior forecast) and disclosing over $60 billion in new orders, signaling strong AI-server demand despite execution risks.

Market Summary: Nasdaq Futures Decline Ahead of Big Tech Earnings

Market Movement:

Nasdaq 100 futures fell 0.71% while S&P 500 contracts declined 0.29% as of 5:39 AM New York time. The pullback follows Tuesday's chip-led rebound, with investors retreating from semiconductor stocks ahead of critical Big Tech earnings.

Key Earnings Tests:

• Alphabet (GOOGL) reports Wednesday, facing scrutiny over whether massive AI capital expenditure is generating adequate returns through Google Cloud growth and faster revenue. Delays to a strategic AI model raise competitive concerns.
• Tesla also reports after the close, with focus on automotive margins, free cash flow, and funding requirements for robotaxi, AI, and humanoid-robot programs. The company delivered 480,126 vehicles in Q2.
• Texas Instruments results loom, with broader semiconductor weakness threatening the sector if Big Tech signals slowing capital spending.

Standout Performance:

Super Micro Computer (SMCI) surged after raising Q4 gross margin guidance to 15-17%, nearly double previous forecasts. The AI-server maker disclosed over $60 billion in new orders, creating a record backlog, though revenue is expected near the lower end of $11-12.5 billion guidance.

Market Risks:

Oil prices traded near six-week highs on Middle East tensions around the Strait of Hormuz and Bab el-Mandeb. Higher energy costs could complicate the Federal Reserve's outlook, potentially keeping policymakers cautious despite recent softer inflation data. The Fed is expected to hold rates at next week's meeting.

Core Concern:

Investors are questioning whether billions invested in data centers, AI models, and robotics are producing adequate returns, creating a critical test for technology spending justification.