US stock futures traded cautiously on Tuesday, 3 November, as investors assessed quarterly earnings from Apple and Palantir, concerns about artificial intelligence investment spending and the upcoming US midterm elections.
Apple (NASDAQ:AAPL) and Palantir Technologies (NASDAQ:PLTR) both declined in after-hours trading despite reporting quarterly results that exceeded analysts’ expectations. Apple’s weaker gross margin guidance and a slowdown in Palantir’s contract value growth overshadowed their stronger earnings.
Oil prices also recovered following reports of a limited US military strike against Iran’s Qeshm Island, renewing concerns about potential disruptions to energy supplies through the Strait of Hormuz.
At 02:56 ET (06:56 GMT), S&P 500 futures were down 14 points, or 0.2%, while Dow Jones futures declined 260 points, equivalent to 0.5%. Nasdaq 100 futures gained 21 points, or 0.1%.
The subdued performance followed a mixed session on Wall Street on Monday, when an initial recovery supported by falling oil prices was undermined by renewed weakness in technology shares.
The Nasdaq Composite fell 1.07% as investors continued to question the sustainability of the substantial investments being made in artificial intelligence infrastructure.
Much of the spending on data centres and computing capacity has been supported by debt and equity financing, raising concerns about whether financial markets can continue absorbing the capital requirements.
Analysts at Vital Knowledge warned that investment spending could eventually be reduced if funding becomes more difficult to secure.
“If the debt and equity can’t be absorbed, industry capital expenditure will inevitably be scaled back,” the analysts said.
Apple reported fiscal fourth-quarter earnings per share of $2.10, an increase of 14% from the previous year, while revenue rose to $114.5 billion.
Both figures exceeded Wall Street expectations, supported by continued demand for the company’s products.
However, sales in China reached $17.5 billion, falling short of forecasts. Demand in Japan was also weaker than expected.
Free cash flow totalled $26.8 billion, below consensus estimates, although the figure remained substantial compared with the cash generation of many technology companies investing heavily in artificial intelligence.
Apple shares had gained more than 24% since the beginning of 2026, partly reflecting investor perceptions that the company was less exposed to the financial risks associated with large-scale AI infrastructure spending.
Nevertheless, the company’s profitability outlook disappointed investors.
Apple forecast gross margins of between 45% and 46% for the current quarter, below analysts’ expectations of approximately 47%.
The company attributed the pressure to rising memory chip prices, which are increasing production costs ahead of the important holiday shopping period.
The outlook presents an early challenge for new Chief Executive Officer John Ternus.
Analysts at Evercore ISI said Apple’s quarterly results supported their view that underlying demand for its hardware remained healthy despite recent price increases.
However, they noted that investors were becoming increasingly focused on profitability rather than sales growth alone.
“The debate is increasingly shifting toward margins and earnings-per-share potential,” the analysts wrote.
Evercore expects Apple to face continued uncertainty over gross margins until memory chip prices begin to stabilise or decline.
The comments reflect broader concerns about rising component costs across the consumer electronics industry, where manufacturers may have to absorb higher expenses or pass them on to customers.
Palantir Technologies reported third-quarter earnings per share of $0.44, exceeding market expectations.
Revenue increased 96% year on year to $2.31 billion, supported by strong demand from US commercial customers and government agencies.
The artificial intelligence and data analytics company also issued fourth-quarter guidance above analysts’ forecasts.
Palantir expects revenue of between $2.649 billion and $2.653 billion, alongside operating income of $1.64 billion to $1.644 billion.
Despite the strong financial performance, the company’s shares declined in extended trading as investors focused on a slowdown in total contract value growth.
The measure, which tracks the aggregate value of contracts signed during a reporting period, is closely monitored as an indicator of potential future revenue.
Growth in total contract value slowed to 6% year on year in the third quarter, compared with 49% in the second quarter.
The deceleration raised questions about the pace of new business commitments, even as revenue from existing operations continued to expand rapidly.
Analysts at William Blair acknowledged the strength of Palantir’s quarterly earnings but suggested that the contract value figures could limit enthusiasm for the stock.
The analysts described the results as “another spectacular quarter”, while warning that the less favourable bookings indicator could lead to a subdued market response.
The contrast between strong revenue growth and slower contract value expansion highlights an important consideration for investors assessing the company’s future performance.
Although Palantir’s fourth-quarter outlook remains positive, the pace of new contract signings could influence expectations for revenue growth in subsequent periods.
Investors were also awaiting Tuesday’s US midterm elections, which will determine control of the House of Representatives and Senate during the remainder of President Donald Trump’s second term.
Republicans currently hold majorities in both chambers, but the election could change the political balance in Washington.
Artificial intelligence has become an increasingly important issue for voters, particularly regarding its potential effects on employment and the expansion of large data centres.
President Trump has supported the development of the US AI industry, arguing that American technological leadership is essential to competing with China.
However, concerns about job displacement, infrastructure development and energy consumption have contributed to debate over the industry’s economic and social consequences.
The cost of living is another major issue, particularly following the increase in energy prices associated with the conflict involving the United States and Iran.
Higher gasoline and diesel prices have added pressure to household budgets, although consumer spending and AI-related investment have continued to support broader US economic activity.
The election outcome could influence future legislation affecting technology, energy and federal spending.
Crude oil prices moved higher on Tuesday after falling sharply in the previous session.
The recovery followed a Wall Street Journal report that US forces had struck Iran’s Qeshm Island on Monday.
Citing US officials, the newspaper said the operation was part of a series of limited military actions conducted against Iran in recent weeks.
According to the report, Washington was seeking to avoid signalling a return to a broader military campaign.
Qeshm Island is located in the Strait of Hormuz, a strategically important waterway for international oil shipments.
The reported strike renewed concerns about potential disruptions to energy supplies and shipping routes through the region.
Oil prices had fallen on Monday after US officials indicated a preference for negotiations with Iran, reducing immediate fears of a wider military escalation following the midterm elections.
However, the latest developments highlighted the continuing uncertainty surrounding diplomatic efforts and the possibility of further military action.
US markets face several important developments as investors assess technology sector earnings, political uncertainty and geopolitical risks.
Apple’s stronger quarterly results were overshadowed by its weaker margin guidance, while Palantir’s rapid revenue growth was accompanied by a significant slowdown in total contract value growth.
Both reports have reinforced scrutiny of technology company profitability and the sustainability of artificial intelligence investment spending.
The US midterm elections could influence the direction of economic and technology policy, while developments involving Iran remain an important factor for energy prices.
Investors will continue monitoring corporate guidance, election results and geopolitical developments for indications of market direction.
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