Dow Jones futures edge lower as momentum fades in tech-led rally

Selling pressure weighs on Dow, S&P 500, and Nasdaq futures after earnings updates from Tesla and Meta Platforms.
Despite results exceeding estimates, Tesla lost nearly 5%; Meta also slipped marginally following its Q3 earnings update.
The next major earnings releases on traders’ radar are those of P&G, Western Digital, and Lockheed Martin.

Selling pressure pushes Dow Jones futures 0.58% lower to near 52,750 during Thursday’s European trading hours. A 0.97% decline takes S&P 500 futures to around 7,720, while Nasdaq 100 futures tumble 1.69% to near 29,500.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

The technology-led advance is losing steam ahead of the opening bell, with US stock futures retreating as investors assess the latest quarterly results from technology majors Tesla and Meta Platforms. Robust corporate earnings and rising enthusiasm for artificial intelligence had fuelled the rally in the preceding session.

A beat on both Wall Street earnings and revenue forecasts failed to support Tesla, whose shares fell nearly 5% in pre-market trading. Meta also slipped 0.36%, even though its third-quarter revenue exceeded expectations and its outlook for the next quarter was positive. Attention is now shifting to Thursday’s forthcoming results from prominent companies such as Procter & Gamble (P&G), Western Digital, and Lockheed Martin.

Does Tesla’s capex cut cast doubt on its AI transition?

Longer-term investment plans continued to dominate investor attention, according to Deutsche Bank. Management noted that the company “slightly boosted its 2026 capex plan from a $130bn-145bn range to $135bn-145bn.” Highlighting the contrast, Deutsche Bank notes that “Tesla fell by -5% after-hours after it cut its 2026 capex target from $25bn to $20bn,” which “raised questions about the speed of its transition into AI and robotics,” although “current revenue and earnings were close to expectations.”

Wednesday’s strong regular US trading session preceded this loss of momentum. Gains of 0.69% for the Dow Jones and 0.58% for the S&P 500 were outpaced by a 1.05% rise in the technology-heavy Nasdaq Composite. Strong earnings from SpaceX and Super Micro Computer bolstered confidence in AI demand and supported the Nasdaq’s advance.

AI stocks: frequently asked questions

How is artificial intelligence defined?

At its core, artificial intelligence is an academic discipline concerned with reproducing human cognitive functions, logical understanding, perception and pattern recognition in machines. Commonly shortened to AI, the field encompasses artificial neural networks, machine learning or predictive analytics, symbolic reasoning, deep learning, natural language processing, speech recognition, image recognition and expert systems. Creating artificial general intelligence, or AGI, is the field’s ultimate objective. Such a machine would be able to tackle arbitrary problems without having been trained specifically to solve them.

Where is AI being applied?

Artificial intelligence serves a wide range of purposes. Among the best-known applications are generative AI platforms, including ChatGPT and Google’s Bard platform, which draw on large language model (LLM) training to respond to text queries. Original images can be produced from user-written text through programs such as Midjourney. Probabilistic techniques underpin other forms of AI that assess an entity’s characteristics or how it is perceived. For example, Upstart’s lending platform assesses applicants’ creditworthiness through an AI-enhanced credit rating system, searching the internet for information about their careers, wealth profiles and relationships. Large databases of scientific research also enable AI systems to propose potential new pharmaceuticals for laboratory testing. By gathering and organising information on viewing habits, YouTube, Spotify, Facebook and other content aggregators use AI to recommend personalised content.

Which stocks offer exposure to the AI sector?

Semiconductor company Nvidia (NVDA) supplies AI-focused computer chips as well as some of the platforms engineers use to develop AI applications. Because it provides the tools for further applications of artificial intelligence, many supporters regard Nvidia as a supplier of essential infrastructure for the AI revolution. The “big data” analytics business Palantir Technologies (PLTR) holds substantial contracts with the US intelligence community. Its Gotham platform helps intelligence agencies sift through data, identify intelligence leads and recognise patterns. Large corporations use its Foundry product to monitor employee and customer data for predictive analytics and anomaly detection. A substantial stake in OpenAI, the privately held creator of ChatGPT, is owned by Microsoft (MSFT). OpenAI’s technology has also been incorporated into Microsoft’s Bing search engine.

Could AI fuel a fresh stock market bubble?

AI-linked shares rallied after ChatGPT became available to the public in late 2022. Over the six months following its launch, Nvidia, for example, gained well over 200%, prompting immediate debate among Wall Street commentators about whether another technology bubble was taking hold. Renowned investor Stanley Druckenmiller, who has held sizeable investments in Palantir and Nvidia, argued that bubbles never run for only six months. In his view, if enthusiasm for AI were to turn into a bubble, extreme valuations would persist for at least two and a half years or for a lengthy period similar to the DotCom bubble of the late 1990s. The best assessment at the midpoint of 2023 was that the market was not in a bubble, at least for the time being. Although Nvidia was valued at 27 times forward sales then, analysts expected exceptionally strong revenue growth over the coming years. By comparison, the NASDAQ 100 traded at 25 times earnings in mid-2023, against 60 times earnings at the DotCom bubble’s peak.