Updates prices throughout, adds details

By Ragini Mathur

July 23 (Reuters) - U.S. stock index futures dipped on Thursday as concerns over heavy AI spending resurfaced after the first batch of Big Tech earnings, while another jump in oil prices linked to the widening Middle East conflict weighed on sentiment.

Second-quarter results from Alphabet GOOGL.O and Tesla TSLA.O, the first of the so-called "Magnificent Seven" megacap companies to report this season, failed to impress investors.

Alphabet posted its strongest-ever quarter of growth in its cloud computing business, but the results did little to reassure investors as attention shifted to its higher spending plans.

Shares of Google's parent fell 3.6% in premarket trading.

Tesla dropped 6% after reporting negative free cash flow for the second quarter for the first time in more than two years.

"Alphabet and Tesla are showing two very different stages of the AI investment cycle," said Lale Akoner, global market strategist at eToro.

"Alphabet is beginning to show that connection. Tesla still needs to prove that its ambitious projects can move from technological promise to commercial returns."

Capital spending plans will remain in focus when other major technology companies report next week, as investors question whether the huge sums being poured into AI are translating into meaningful returns, and if profit growth can justify elevated stock valuations.

Geopolitical concerns added to the pressure. After months of investor focus on the Strait of Hormuz, attention has shifted to the Red Sea, where Iranian-aligned Houthis, who control areas near the Bab el-Mandeb strait, have opened a new front in the Middle East crisis.

Brent crude futures rose to $98 a barrel, their highest level since early June. O/R

The surge in oil prices revived inflation worries, pushing interest-rate-sensitive 2-year Treasury yields to a 17-month high as traders increased bets on a Federal Reserve rate hike as early as next week. US/

Markets are now pricing in about a 35% chance of a 25-basis-point increase at the Fed's July meeting, up from 12% a week ago, according to CME's FedWatch tool. Expectations for a similar move in September stand at 55%.

The weekly jobless claims report, due at 8:30 a.m. ET, could provide further clues on the health of the economy.

At 06:51 a.m. ET, Dow E-minis YMcv1 were down 142 points, or 0.27%, and S&P 500 E-minis EScv1 were down 20.25 points, or 0.27%. Nasdaq 100 E-minis NQcv1 were down 81.5 points, or 0.28%.

Chip stocks, which have recently hit a volatile patch, were mixed. Texas Instruments TXN.O fell 4% despite forecasting quarterly revenue above estimates.

Defense giant Lockheed Martin LMT.N gained 5.4% after lifting 2026 sales and profit forecasts.

ServiceNow NOW.N jumped 7% after the enterprise software company raised its annual subscription revenue forecast for the second time.