US STOCKS-Nasdaq eyes lower open after midterms-fueled surge as chip, data center stocks fall

Updates before markets open

By Shashwat Chauhan and Utkarsh Hathi

Nov 5 (Reuters) - The Nasdaq was set for a lower open on Thursday as losses in chip and data center-related stocks weighed, while broader markets were steady after a rally in the last session on the back of Democrats' sweeping midterm election victory.

Qualcomm QCOM.O dropped 11.2% 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 AAPL.O revenue.

Broader semiconductor stocks extended losses after Wednesday's fall, with Nvidia NVDA.O down 1.5%, Marvell Technology MRVL.O off 4.5% and Intel INTC.O slipping 2.3%.

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.

"Tighter data center restrictions on the margin raise the risk to future supply of 'compute', especially in key buildout states like Texas, Georgia and Ohio," BCA Research analysts said.

"That raises the value of existing capacity among hyperscalers with more diversified global exposure and resources, supporting their more resilient outlook relative to neoclouds."

Data center operators IREN IREN.O, Hut 8 HUT.O, and Applied Digital APLD.O fell over 4% each. Neoclouds CoreWeave CRWV.O and Nebius Group NBIS.O fell 3.9% each.

Utilities and equipment suppliers exposed to the data center boom, including GE Vernova GEV.N and Constellation Energy CEG.O, were also trading lower. AI server maker Dell DELL.N dropped 5.3%.

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 AMZN.O rose 2.2%, while Meta Platforms META.O and Alphabet GOOGL.O were up around 1% each.

Elon Musk-led SpaceX SPCX.O and Tesla TSLA.O were down over 2% 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 8:24 a.m. ET, Dow E-minis YMcv1 were up 327 points, or 0.61%, and S&P 500 E-minis EScv1 were up 7.75 points, or 0.1%. Nasdaq 100 E-minis NQcv1 were down 222.25 points, or 0.78%.

The S&P 500 .SPX 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 LCOc1 were up over 2.8% 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 FICO.N dropped 10% after missing fourth-quarter profit estimates, while Snapchat owner Snap SNAP.N slid 10.2% after missing third-quarter revenue estimates.

AppLovin APP.O jumped 21.6% after the marketing platform beat third-quarter profit estimates.

(Reporting by Shashwat Chauhan and Utkarsh Hathi in Bengaluru; Editing by Maju Samuel)

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