Microsoft's Strong Earnings Lift U.S. Stock Futures After Broad Market Sell-Off

U.S. stock index futures advanced in overnight trading, driven by a surge in Microsoft shares after the technology giant reported robust quarterly earnings and offered a reassuring outlook on its capital spending for artificial intelligence. The gains mark a potential rebound from a broad market sell-off during Wednesday's regular session.

As of 19:55 ET, Nasdaq 100 Futures led the advance, rising 0.7%, according to Investing.com data. S&P 500 Futures gained 0.36%, while Dow Jones Futures were up 0.3%.

Tech Earnings Paint a Mixed Picture

Microsoft (MSFT) shares jumped nearly 9% in aftermarket trading after the company beat analyst expectations on revenue and profit for its fiscal fourth quarter. Growth was fueled by strong demand for its Azure cloud and AI services, which surpassed forecasts.

Crucially for investors, Microsoft eased concerns about runaway AI costs by lowering its capital expenditure forecast for the 2026 calendar year to $175 billion from a previous projection of $190 billion. The move provided relief to a market increasingly sensitive to the impact of heavy AI investment on corporate margins.

In sharp contrast, Meta Platforms (META) shares slid approximately 7% after hours. The social media company reported weaker-than-expected second-quarter earnings and provided a third-quarter forecast that also missed Wall Street estimates. Meta also signaled higher spending ahead, raising the lower end of its 2026 capital expenditure outlook.

Market Rebound Follows Sharp Losses

Ad

The positive sentiment from Microsoft's report follows a deeply negative session on Wall Street. On Wednesday, the S&P 500 slid 1.5%, the Dow Jones Industrial Average fell 2.2%, and the tech-heavy Nasdaq Composite declined 1.7%.

The sell-off was attributed to a continued rout in chipmaker stocks amid anxiety over high valuations, coupled with uncertainty following the Federal Reserve's latest policy meeting. Investors are now looking ahead to quarterly reports from Amazon.com (AMZN) and Apple Inc (AAPL) on Thursday for further signals on the health of the tech sector.

Fed Policy Uncertainty Lingers

The market's recent volatility comes as investors digest the latest communication from the Federal Reserve. While the central bank held interest rates steady on Wednesday, as was widely anticipated, details from the meeting revealed a growing split among policymakers.

Officials appear divided on the necessity of future rate hikes to combat persistent inflation. The lack of clear forward guidance from the central bank has added a layer of uncertainty for investors, contributing to the previous session's risk-off sentiment.