Dec 12 (Reuters) – Futures tracking the S&P 500 and Nasdaq slid on Friday as chipmaker Broadcom’s results sparked fresh worries about a potential artificial intelligence bubble, dampening investor optimism from a less hawkish Federal Reserve monetary policy decision earlier in the week.
Broadcom shares fell 5% in premarket trading after the chipmaker warned of lower future margins on its AI system sales, despite forecasting strong quarterly revenue, deepening concerns about the profitability of investments in the technology.
Other chip stocks including Advanced Micro Devices and Nvidia lost 1.2% and 0.8%, respectively, a day after Oracle
Shares of the cloud company fell 1% after logging its biggest daily drop since January in the previous session.
“Investors are positioning for the next stage of the AI revolution, where end users begin to employ the technology and capture growth and productivity gains,” said Kyle Rodda, a senior financial market analyst at Capital.com.
At 5:41 a.m. ET, Dow E-minis were up 82 points, or 0.17%, S&P 500 E-minis were down 13.5 points, or 0.20% and Nasdaq 100 E-minis were down 142.75 points, or 0.56%.
Despite the gloomy overhang, Wall Street’s main indexes are on track for weekly gains as the S&P 500, the Dow and the Russell 2000 closed at record highs on Thursday after the Federal Reserve lowered borrowing costs and issued a less hawkish outlook than investors had feared.
The biggest gains were in the blue-chip and small-cap indexes, which have outperformed the benchmark S&P 500 for much of this quarter as investors rotated out of AI-popular growth names and into value sectors such as healthcare.
“The move out of tech and into growth-sensitive sectors comes as investors try to put money into relatively cheap areas of the market likely to benefit from rate cuts,” said Rodda.
Investors will be looking out for remarks from several policymakers later on Friday, such as Philadelphia Fed President Anna Paulson, Cleveland Fed President Beth Hammack and Chicago Fed President Austan Goolsbee.
Their comments on the economy and interest rates will be closely watched at a time when traders are pricing in a total of 50 basis points of rate cuts by the end of 2026 – more than the Fed signaled on Wednesday.
Key data next week include the Labor Department’s non-farm payrolls report and the Consumer Price Index for the month of November.
Among others, Lululemon Athletica
U.S.-listed shares of cannabis companies rose after a report said President Donald Trump was looking to cut restrictions on marijuana through a planned order. Canopy Growth added 20.4%, and Tilray Brands climbed 30.2%.
(Reporting by Johann M Cherian in Bengaluru; Editing by Tasim Zahid; Editing by Tasim Zahid)
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