Investing.com - U.S. stock futures point lower on Wednesday, with traders focused on a slew of earnings and trade tensions between the U.S. and China. Alphabet (NASDAQ:GOOGL) outlines a spike in capital expenditures despite recent DeepSeek-inspired worries over AI spending, while Snap’s quarterly results top estimates. Meanwhile, Nvidia-rival Advanced Micro Devices (NASDAQ:AMD) unveils disappointing quarterly data center revenues.
1. Futures lower
Stock futures on Wall Street dipped on Wednesday, as investors assessed a wave of corporate earnings and the outlook for potential trade negotiations between the U.S. and China.
By 03:34 ET (08:34 GMT), the S&P 500 futures contract had slipped by 25 points or 0.4%, Nasdaq 100 futures had fallen by 138 points or 0.6%, and Dow futures had dropped by 65 points or 0.2%.
The major averages all ended higher in the prior session, buoyed in part by hopes that U.S. President Donald Trump’s decision to delay tariffs on Mexico and Canada signaled possible flexibility in his negotiating stance with China. Although a 10% levy on China came into effect on Tuesday, sentiment was also supported by a retaliation from Beijing that some observers perceived to be relatively restrained and a move to position itself for trade talks.
However, it remained unclear when Trump and Chinese President Xi Jinping would speak. Trump said he was in no rush to hold the discussions.
"A consensus U.S.-China deal does seem the most likely scenario, but we sense markets are under-pricing the risk of a more prolonged trade spat," analysts at ING said in a note to clients.
Markets have also been bolstered by mostly solid quarterly corporate returns, with more than three-fourths of the 211 firms in the S&P 500 that have reported so far unveiling better-than-anticipated results.
2. Alphabet outlines spending hike
Still, some key earnings reports have not been viewed favorably by investors, including figures from Google-parent Alphabet.
The search giant said it plans to spend $75 billion on building out its artificial intelligence capabilities this year, well above the $58 billion in capital expenditures pencilled in by analysts. Concerns have swirled around heavy AI spending by Big Tech names like Alphabet, particularly in the wake of the emergence of a low-cost AI model from Chinese start-up DeepSeek last week.
DeepSeek’s claim that its model delivered comparable performance to OpenAI’s ChatGPT with less-advanced chips and at a fraction of the cost has been met with widespread skepticism, but has still sparked worries around both the necessity -- and eventual profitability -- of massive AI spending. Alphabet CEO Sundar Pichai said that Google’s Gemini AI models are similar in efficiency to DeepSeek.
Compounding the disappointment around Alphabet’s numbers was its key cloud computing division. Revenue at the business expanded by 30% in the fourth quarter to $11.96 billion, slowing from growth of 35% in the prior quarter. Analysts were anticipating an uptick of 32.3% to $12.16 billion, according to LSEG data cited by Reuters.
Shares in Alphabet slumped by more than 7% in extended hours trading.
3. Snap’s earnings top estimates
Snap shares jumped more than 5% in after-hours trading after the Snapchat-owner posted better-than-expected quarterly earnings and issued upbeat guidance on the back of stabilizing digital ad spending.
The short-form video platform reported earnings per share of $0.16, comfortably beating analysts’ estimates of a loss of $0.04. Revenue rose to $1.56 billion, slightly ahead of Wall Street expectations of $1.55 billion.
"Active advertisers more than doubled in [the fourth quarter], with the improvements we have made to our advertising platform driving improved advertiser performance and helping to grow revenue 14% year-over-year,” said CEO Evan Spiegel.
Daily active users (DAUs), a key metric for social media companies, climbed to 453 million in the quarter, and Snap projected first-quarter DAUs to reach about 459 million.
4. AMD data center revenue disappoints
Advanced Micro Devices shares slumped in extended hours trading after its fourth-quarter data center revenue came in at $3.9 billion, below consensus expectations of $4.15 billion.
The performance of the data center unit is key for AMD, as it is one measure of the strength of demand for its processors that compete with rival Nvidia’s (NASDAQ:NVDA) chips.
Chief Executive Lisa Su later told analysts that AMD’s data center sales in the current quarter will fall by around 7% versus the prior quarter. Su also declined to present an exact forecast for revenue from AMD’s high-end AI chips, saying it anticipates "tens of billions" in sales over the "next couple of years".
Elsewhere, Novo Nordisk (NYSE:NVO) forecast slower sales growth for 2025 than 2024, suggesting the Danish drugmaker, which sells popular weight management drug Wegovy, is losing its edge in the competitive obesity market.
On Wednesday, the earnings parade marches on, with results due out from chipmaker Qualcomm (NASDAQ:QCOM), media giant Walt Disney (NYSE:DIS), and ride-hailing group Uber (NYSE:UBER).
5. Gold touches record high
Gold prices hit a record high in Asian trade on Wednesday as safe haven demand for the yellow metal was underpinned by persistent concerns over a brewing trade war between the U.S. and China.
President Trump’s suggestion that the U.S. could "take over" Gaza and relocate Palestinians also drove haven demand, given that it drew a sharp rebuke from several countries in the region.
Bullion prices were also aided by weakness in the dollar, which wiped out all of its gains this week after Trump postponed his tariffs on Mexico and Canada.
In oil markets, crude prices slipped on higher-than-expected US crude inventories data and worries over Sino-American trade tensions.