AI Chip Rivalry Boosts Alphabet Amid Market Fluctuations

U.S. stock futures dipped following a tech-driven rally, as investors awaited economic data and earnings. Alphabet shares rose 3.1% on reports of Meta's interest in using Google's AI chips. Investor sentiment shifted on predictions of lower Federal Reserve borrowing rates, boosting Nasdaq significantly.

U.S. stock index futures dipped on Tuesday, as investors cooled from a tech rally and awaited key economic data and earnings reports poised to reveal the robustness of the American consumer. This follows a day of notable gains for technology stocks on Wall Street.

Alphabet saw a 3.1% premarket boost after reports surfaced about Facebook parent Meta considering using Google's AI chips in its data centers by 2027. This plan includes renting chips from Google Cloud as early as next year. This development affected competitors Nvidia and AMD, which saw a dip, while Alphabet's partner Broadcom gained ground.

Investor optimism around technology stocks increased on expectations that the Federal Reserve would reduce borrowing costs in December. Major figures, such as FOMC's John Williams and Christopher Waller, signalled support for this move, reinforcing these expectations and driving market sentiment upwards, particularly for tech-heavy indexes.

(With inputs from agencies.)