By Shashwat Chauhan and Utkarsh Hathi
Nov 5 (Reuters) - Nasdaq futures dropped on Thursday as chip and data center-related stocks remained under pressure, while S&P 500 contracts extended gains slightly from the last session following the Democrats' sweeping midterm election victory.
Qualcomm dropped 9.6% in premarket trading after the chipmaker fell short of Wall Street estimates for fourth-quarter smartphone chip sales on sluggish demand and declining Apple-related revenue.
Broader semiconductor stocks
extended losses after Wednesday's fall, with Nvidia down 0.8%, Marvell Technology off 3.4% and Intel slipping 2%.
Chip stocks, along with companies linked to the AI infrastructure buildout, slipped further following the Democrats' election victory including in some key data-center states, where public opposition to the industry's rapid expansion has been growing.
"Data center pauses will slow the pace of buildout into 2028 with ~30% of expected 2028 additions now at risk of being impacted," UBS strategists said in a note.
"The slowdown is a negative for Semis and AI infrastructure, but a lot is already priced into Semis with valuations nearing multi-year lows."
Data center operators IREN, Hut 8, and Applied Digital fell between 1.1% and 2.7%. Neoclouds CoreWeave and Nebius Group fell 3% each.
Utilities and equipment suppliers exposed to the data center boom, including GE Vernova and Constellation Energy, were also trading lower. AI server maker Dell was down 2.9%.
Most large-cap tech stocks meanwhile built on their gains from the last session as a slower AI buildout was seen as helping them.
Amazon.com, Meta Platforms and Alphabet were up above 1%.
Elon Musk-led SpaceX and Tesla were down over 1% each, extending losses. Musk spent nearly half a billion dollars backing Republican candidates, including efforts to keep them in control in Texas, the home state of both companies.
At 7:04 a.m. ET, Dow E-minis were up 330 points, or 0.62%, and S&P 500 E-minis were up 15.5 points, or 0.2%. Nasdaq 100 E-minis were down 145.5 points, or 0.51%.
The S&P 500 clocked its biggest one-day percentage gain in three months on Wednesday as the easing political uncertainty boosted risk appetite.
Some analysts said that a divided government in Washington could lead to fewer sharp legislative changes and may even make it harder to agree on fiscal spending, given the US's deteriorating fiscal picture.
A sharp drop in oil prices in the previous session had also supported the sentiment. Brent crude futures were up over 1% on Thursday after dropping more than 8% on Wednesday.
Crude oil prices have been in focus this year as concerns about supply disruptions from the Middle East conflict have driven sharp swings and stoked inflation worries.
Central banks around the world have acknowledged inflation remains elevated, with the US Federal Reserve even hiking its interest rates in September and markets pricing in another hike next month.
At least three Fed officials, including Richmond Fed President Thomas Barkin are slated to speak throughout the day, leading up to a crucial October jobs report due on Friday.
Among other stocks, credit-scoring firm Fair Isaac dropped 8.5% after missing fourth-quarter profit estimates, while Snapchat owner Snap slid 9% after missing third-quarter revenue estimates.
AppLovin jumped 20% after the marketing platform beat third-quarter profit estimates.
(Reporting by Shashwat Chauhan and Utkarsh Hathi in Bengaluru; Editing by Maju Samuel)
