US stocks - Nasdaq futures drop on AI chip worries ahead of pivotal earnings

When AI hyperscalers Amazon.com, Meta, Apple and Microsoft report earnings later this week, investors will be keen to see if their investments, worth over several hundred billion dollars, are yielding returns. The reports are also expected to offer clues on the demand for chips and other AI infrastructure.

Shares of the four U.S. companies were marginally higher in premarket trading on Tuesday.

At 04:27 a.m. ET, Dow E-minis were up 100 points, or 0.19%, and S&P 500 E-minis were down 6.5 points, or 0.09%. Nasdaq 100 E-minis were down 194.5 points, or 0.69%.

The Federal Reserve is also due to announce its interest rate verdict on Wednesday at the end of its two-day meeting. Traders only see a 37.4% likelihood for a rate hike this week, according to LSEG-compiled data, but are confident that borrowing costs could rise by at least 25 basis points by the end of the year.

Offering both the Fed and investors some relief, oil prices fell 2.8% to a one-week low as a fragile ceasefire between the U.S. and Iran held up despite drone attack reports out of Saudi Arabia, Jordan and Iraq.