US STOCKS-S&P 500, Nasdaq set for muted open as Broadcom adds to AI bubble angst

Updates with prices before the opening bell, analyst comments

By Johann M Cherian and Pranav Kashyap

Dec 12 (Reuters) - The S&P 500 and the Nasdaq were set to open lower on Friday as Broadcom's latest results added to concerns about an AI-fueled bubble, dampening optimism stoked by the Federal Reserve's less-hawkish-than-expected signals on 2026 rate cuts.

Broadcom AVGO.O slid 6.3% in premarket trade after the chipmaker warned of slimmer future margins on its AI system sales, despite projecting strong quarterly revenue. This sharpened worries about the profitability of surging AI investments.

The S&P 500 and the Nasdaq futures pared some losses, while Nvidia NVDA.O reversed course to trade nearly 1% higher after a report said the company is evaluating an increase in H200 chip production to meet robust demand from China.

Other chip stocks, such as Advanced Micro Devices AMD.O lost 1%, a day after Oracle ORCL.N unveiled a weak forecast.

Shares of the cloud company fell 1% after logging their biggest daily drop since January in the previous session.

At 8:15 a.m., Dow E-minis YMcv1 were up 104 points, or 0.21%, S&P 500 E-minis EScv1 were down 4.75 points, or 0.07% and Nasdaq 100 E-minis NQcv1 were down 123.5 points, or 0.48%.

Despite the gloomy outlook, the S&P 500 .SPX, the Dow .DJI and the Russell 2000 .RUT all closed at record highs on Thursday and were on track for weekly gains after the Fed trimmed borrowing costs and delivered a less hawkish outlook than investors had feared.

The biggest gains were in the blue-chip and small-cap indexes, underscoring a shift into value stocks away from the mega-cap names. The Russell 2000 has outpaced the S&P 500 for much of this quarter as investors rotate out of AI-fueled growth names and into value-heavy sectors such as healthcare .SPXHC.

"There's plenty of cash on the sidelines, the consumer is not as dire as many proclaimed, and the Fed is easing, not tightening. Plus, many sectors and stocks are well rested and ready to run," said Robert Edwards, chief investment officer, Edwards Asset Management.

Investors will be looking out for remarks from several policymakers later on Friday, such as Philadelphia Fed President Anna Paulson, Cleveland Fed President Beth Hammack and Chicago Fed President Austan Goolsbee.

Their comments on the economy and interest rates will be closely watched at a time when traders are pricing in a total of 50 basis points of rate cuts by the end of 2026 – more than the Fed signaled on Wednesday.

Key data next week include the Labor Department's non-farm payrolls report and the Consumer Price Index for the month of November.

"While they (the Fed) aren’t racing to cut, they're clearly in the rate-cutting lane," Edwards added.

Among others, Lululemon Athletica <LULU.O> jumped 10% after the apparel maker said that CEO Calvin McDonald was leaving the company and raised its annual profit forecast.

U.S.-listed shares of cannabis companies rose after a report said President Donald Trump was looking to cut restrictions on marijuana through a planned order. Canopy Growth CGC.O added 27.5%, and Tilray Brands TLRY.O climbed 32.6%.

(Reporting by Johann M Cherian and Pranav Kashyap in Bengaluru; Editing by Tasim Zahid)

((johann.mcherian@thomsonreuters.com))