US futures tumble as Alphabet earnings revive AI spending fears, Amazon is next in the firing line

Heading into the big tech earnings releases yesterday, Wall Street was hoping for a little reassurance that all those billions being poured into AI would eventually pay off. Instead, Alphabet has just handed investors another reason to question whether the AI spending frenzy is getting a little out of hand. Well, so much for big tech earnings coming to the rescue, eh?S&P 500 futures are now down 0.5% and Nasdaq futures down by 1.4% as the market digests a rather mixed bag of earnings overnight.The biggest culprit? Alphabet (or Google if you need another reminder of the face behind the mask).Shares are down by roughly 10% in after-hours trading, wiping out almost $400 billion off its market value. The earnings release showed Google Cloud revenue more than doubling from a year earlier. However, weaker-than-expected earnings and negative quarterly free cash flow have investors questioning the sheer scale of its AI spending. Trouble, trouble.The earnings did at least signal that growth is there, but just how much is it really going to cost to keep that growth going? That is the question.Meanwhile, Microsoft did at least offer up some relief to investors with shares gaining by nearly 4% in after-hours trading. That comes after the firm reported stronger Azure growth and better-than-expected cash flow.Besides the big names, there were notable moves among smaller software stocks too. ServiceNow shares are down around 19% and Fortinet shares are down by almost 25% after disappointing earnings results and guidance, adding to the broader tech selling pressure.Having said that, I wouldn't exactly say that the house of cards is crashing down just yet. For now, the selling pressure looks more measured and isolated to a couple of names, Alphabet in particular, rather than a massive exodus out of tech. However, we are continuing to see more of a rotation play though with Dow futures up 0.4% so far today.In any case, I reckon the signal from this is that investors are certainly becoming less forgiving when it comes to companies spending billions without showing enough returns.The reaction toward Alphabet underscores that sentiment, and we won't have to wait too long before we get to the next test. All eyes will turn to Amazon later today for that.AWS growth will naturally be a major focus, but investors will surely be more interested in what Amazon has to say about AI capital expenditure and the returns it expects from those investments instead.I reckon at this point, even strong cloud growth might not be enough to satisfy Wall Street. So, Amazon had better come prepared with some convincing answers. This article was written by Justin Low at investinglive.com.