Investing.com -- US stock futures edge lower as traders gauge quarterly reports from major technology groups. Both Microsoft (NASDAQ:MSFT) and Meta Platforms (NASDAQ:META) post higher-than-expected revenue and net profit, but worries persisted around the impact of their heavy expenditures on artificial intelligence. Elsewhere, Samsung Electronics's (KS:005930) chip unit logs quarterly operating income that missed projections, although the memory-chip provider said it was making "meaningful progress" in securing a major supply deal.
1. Futures lower
US stock futures pointed lower on Thursday as investors digested earnings from big-name technology companies and assessed a raft of economic data.
By 04:31 ET (08:31 GMT), the Dow futures contract had fallen by 209 points or 0.5%, S&P 500 futures had slipped by 47 points or 0.8%, and Nasdaq 100 futures had shed 225 points or 1.1%.
The main averages ended the prior session in the red, with markets looking ahead to key returns from software giant Microsoft and Instagram-parent Meta Platforms (more below).
Shares in Alphabet (NASDAQ:GOOGL), the first of the so-called "Magnificent Seven" group of megacap tech stocks to report this week, rose on the Google-owner's better-than-anticipated third-quarter revenue and income.
However, equities were weighed down by disappointing outlooks from chipmaker Advanced Micro Devices (NASDAQ:AMD) and wireless products maker Qorvo (NASDAQ:QRVO).
Server manufacturer Super Micro Computer (NASDAQ:SMCI) slumped by more than 30% after it announced that EY has resigned as its auditor, denting the stock price of Nvidia (NASDAQ:NVDA). Super Micro, which packages GPU chips made by Nvidia into server systems, has hugely benefited from its relationship with artificial intelligence semiconductor titan.
On the data front, markets were pouring through an advance estimate of third-quarter US gross domestic product that was below expectations and hotter-than-projected private payrolls growth. The numbers, along with a key nonfarm payrolls report later this week, are the last economic readings before the all-important -- and extremely close -- Nov. 5 presidential election.
2. Microsoft unveils soft guidance
Shares in Microsoft sank in premarket US trading after the company's executives warned that revenues at its crucial Azure cloud computing unit were softening in the current quarter.
The statement erased earlier gains in the stock. Investors were initially cheered by a 16% uptick in fiscal first-quarter revenues from the year-ago period to $65.6 billion, which topped Wall Street forecasts of $64.5 billion. Net income of $24.7 billion beat expectations as well.
Undergirding the returns was quarterly revenue from Azure and its other cloud services, which gained by 33% from the previous year, although Chief Financial Officer Amy Hood flagged the segment's growth would slow to between 31% to 32% in its second quarter.
Microsoft added that its capital expenses would expand because of ongoing investments into building out its AI capabilities. The company has turned itself into one of the foremost figures of the boom in the enthusiasm around the nascent technology, thanks in particular to Azure's success and a partnership with ChatGPT-maker OpenAI.
3. Meta's AI bets in focus
Elevated AI expenditures were also in focus at Meta Platforms, with the Facebook-owner's Chief Executive Mark Zuckerberg saying the spending was showing "strong momentum."
Meta especially highlighted an anticipated "significant" surge in capital investments in 2025 mostly due to the cash needed to run its AI infrastructure. Meta has been banking on AI as a tool to enhance its offerings and satisfy wary stakeholders following a lossmaking gamble by Zuckerberg on an avatar-filled metaverse.
However, the pressure from investors remains high on not just Meta but also its megacap tech rivals. Concerns are beginning to rise around the timeline for the pay outs from these groups' massive AI bets as well as the impact the spending could have on recently fat margins.
Shares in Meta dipped in premarket trading even though the firm unveiled higher-than-anticipated revenues of $40.6 billion and net profit of $15.7 billion.
Attention now turns to e-commerce giant Amazon (NASDAQ:AMZN) and iPhone-maker Apple (NASDAQ:AAPL), which are scheduled to post their latest results after the closing bell on Thursday. Like their Big Tech peers, the outlook for AI investments will likely play a major role in these reports.
4. Samsung Electronics chip unit income misses estimates
Operating profit at top memory-chip manufacturer Samsung Electronics's crucial semiconductor division slipped by 40% versus the prior quarter in the July to September period to 3.9 trillion won, missing estimates and falling short of rival SK Hynix.
Samsung said the unit's profits were hit by one-off expenses, including the provision of employee incentives and foreign exchange headwinds related to a weaker US dollar.
The numbers come after Samsung publicly apologized for disappointing returns from the chip business, which has grappled with stiff competition from SK Hynix in delivering the high bandwidth memory (HBM) chips utilized in AI hardware.
However, Seoul-listed shares in Samsung eked out a marginal gain on Thursday after the company vowed to focus on producing the high-end processors and revealed it was making "meaningful progress" in winning approval from a "major customer." Sales of its HBM chips are seen rising in the fourth quarter.
5. Crude choppy
Oil prices were choppy on Thursday after an unexpected draw in US inventories pointed to strength of demand in the world’s largest crude consumer.
By 04:30 ET, the Brent contract dipped 0.4% to $71.91 per barrel, while US crude futures (WTI) traded 0.3% lower at $68.39 a barrel.
Both contracts rose more than 2% on Wednesday, after falling more than 6% earlier in the week on the reduced risk of a wider Middle East conflict.
US gasoline stockpiles fell unexpectedly in the week ending Oct. 25 to a two-year low, according to data from the Energy Information Administration, while crude inventories also posted a surprise fall.