Jan 29 (Reuters) – U.S. stock index futures edged higher on Thursday, as investors weighed another surge in AI-related spending from the tech mega-caps and the Federal Reserve held rates steady as expected.
Meta jumped 7.9% in premarket trading as the social media giant paired an upbeat revenue forecast with a 73% jump in this year’s capex budget. Tesla rose 2.9% after outlining plans to more than double capital expenditure to a record level.
Microsoft, however, dropped 6.4% as its cloud revenue failed to impress and stoked fears the hefty outlays behind its OpenAI alliance are not translating into monetization fast enough.
The latest results from three of the so-called “Magnificent Seven” companies suggest investors are willing to overlook massive AI expenditures so long as they yield tangible returns.
The group, which represents about one‑third of the S&P 500’s market cap, has driven a sustained rally in U.S. equities, and continues to trade at elevated valuation multiples.
“Traders are no longer rewarding the biggest spenders, and Microsoft’s elevated capex appears to have spooked them, leaving doubts that the continued spend will deliver a clear path to profit,” said Jake Behan, head of capital markets at Direxion.
“Capex remains the market’s central concern for hyperscalers, as trader focus shifts from growth optics to the timing and payoff of AI investment.”
At 05:21 a.m. ET, Dow E-minis were up 42 points, or 0.09%, S&P 500 E-minis were up 13.5 points, or 0.19%, and Nasdaq 100 E-minis were up 67.5 points, or 0.26%
Apple rose 0.5% ahead its results after the bell.
Bellwether IBM jumped 8.3% after beating estimates in its fourth-quarter earnings.
EXPECTED FED DECISION
The U.S. central bank held rates steady at the 3.5%–3.75% range in a widely expected move.
The S&P 500 and the Dow closed virtually unchanged, while the Nasdaq managed only a small uptick.
Chair Jerome Powell said the Fed would be data-dependent, and the upside risks to inflation and downside risks to employment had diminished.
Traders kept their rate‑cut expectations intact, continuing to price the first reduction for June, according to CME’s FedWatch tool.
U.S. President Donald Trump and Democrat Senator Chuck Schumer moved to reach an agreement to negotiate new restrictions on federal immigration agents, potentially averting a government shutdown, the New York Times reported.
The funding deadline is Friday midnight.
Among other stock moves, rare-earth miners slid following a report the Trump Administration would step back from critical mineral price floors.
USA Rare Earth fell 10%, MP Materials was down 5.7%, while Critical Metals and United States Antimony dropped 8% each.
(Reporting by Pranav Kashyap in Bengaluru; Editing by Krishna Chandra Eluri)
