BY COMFORT OGBONNA
U.S. stock index futures inched higher on Thursday as investors digested a fresh batch of earnings from major technology companies, many of which underscored another surge in spending tied to artificial intelligence. Markets were also steady after the Federal Reserve left interest rates unchanged, a move that was widely anticipated and largely priced in by investors.
Pre-market trading showed mixed reactions among the largest technology names, reflecting growing sensitivity to how aggressively companies are investing in AI and how quickly those investments may translate into profits. Meta Platforms surged nearly 9% in early trading after the social media company paired an upbeat revenue outlook with a sharp increase in capital spending. Meta said its capital expenditure budget for the year would jump 73%, highlighting its push to expand AI infrastructure and related technologies.
Tesla shares rose about 2.4% after the electric vehicle maker outlined plans to more than double its capital expenditure to a record level, reinforcing its commitment to long-term investments in manufacturing capacity, AI-driven software, and autonomous technology. Investors appeared willing to look past the higher spending in favor of the company’s longer-term growth ambitions.
Microsoft, however, weighed on sentiment, with shares falling roughly 7.5% in premarket trading. The software giant’s cloud revenue failed to meet lofty expectations, raising concerns that its heavy investment in artificial intelligence, including its close partnership with OpenAI, may not be generating meaningful returns quickly enough. The reaction highlighted growing investor scrutiny over whether massive AI-related spending is delivering clear monetization.
Together, the results from Meta, Tesla, and Microsoft — three members of the so-called “Magnificent Seven” — suggest that investors remain supportive of large-scale AI investments, but only when there is confidence those expenditures will eventually lead to stronger earnings. The group, which accounts for roughly one-third of the S&P 500’s total market capitalization, has been a key driver of the rally in U.S. equities and continues to trade at relatively elevated valuations.
Market participants increasingly appear to be differentiating between companies that can justify higher capital spending and those that cannot. Jake Behan, head of capital markets at Direxion, said traders are no longer automatically rewarding the biggest spenders. He noted that Microsoft’s elevated capital expenditures appeared to have unsettled investors, fueling doubts about whether continued spending will deliver a clear and timely path to profit. According to Behan, capital expenditure has become the market’s central concern for hyperscale technology firms, as attention shifts away from headline growth and toward the timing and payoff of AI investments.
As of 7:00 a.m. ET, Dow E-mini futures were up 9 points, or 0.02%. S&P 500 E-minis gained 13 points, or 0.19%, while Nasdaq 100 E-minis rose 54.5 points, or 0.21%, signaling a cautiously positive start to the trading day.
Beyond big tech, earnings updates across other sectors added to market momentum. Honeywell shares edged higher after the industrial conglomerate reported an increase in quarterly revenue and profit. Caterpillar climbed about 2% after posting stronger-than-expected quarterly profit, benefiting from resilient demand and pricing power.
Southwest Airlines jumped more than 5% after forecasting annual profit above market expectations, even as the carrier cited disruptions from U.S. winter storms. Dow Inc., by contrast, said it would cut roughly 4,500 jobs as part of a restructuring effort aimed at boosting profitability by at least $2 billion. Its shares slipped around 1% following the announcement.
Apple shares rose modestly ahead of the company’s earnings report, which is due after markets close, as investors positioned themselves for results from the world’s most valuable company. IBM stood out with a sharp rally, surging nearly 9.5% after beating estimates in its fourth-quarter earnings, offering some reassurance about enterprise demand for technology services.
On the policy front, the Federal Reserve’s latest decision provided little surprise. Chair Jerome Powell reiterated that future moves would remain data-dependent, adding that both the upside risks to inflation and the downside risks to employment have diminished. Investors are now turning their attention to initial jobless claims data due later in the morning for further insight into labor market conditions.
Traders largely held onto their expectations for interest rate cuts, continuing to price in a first reduction in June, according to market-based measures. In the previous session, the S&P 500 and the Dow ended nearly flat, while the Nasdaq managed only a slight gain.
Meanwhile, political developments also hovered in the background. U.S. President Donald Trump and Senate Minority Leader Chuck Schumer were reported to be working toward an agreement to negotiate new restrictions on federal immigration agents, a move that could help avert a government shutdown ahead of a funding deadline set for Friday at midnight.
In individual stock moves, rare-earth and critical mineral miners came under pressure after reports that the administration may step back from proposed price floors for critical minerals. Shares of USA Rare Earth tumbled nearly 10%, while MP Materials fell more than 5%. Critical Metals and United States Antimony also dropped by over 5% each, reflecting concerns about future pricing support for the sector.