US stock futures showed little direction on Tuesday, 3 November, as investors weighed stronger-than-expected earnings from Apple and Palantir against concerns about technology sector profitability, artificial intelligence spending and the upcoming US midterm elections.
Apple (NASDAQ:AAPL) and Palantir Technologies (NASDAQ:PLTR) both declined in after-hours trading despite exceeding Wall Street’s quarterly earnings expectations. Apple’s outlook for lower gross margins and a slowdown in Palantir’s contract value growth drew attention away from their headline results.
Meanwhile, crude oil prices recovered following reports of a US military strike against Iran’s Qeshm Island, renewing concerns about potential disruptions to energy supplies in the Strait of Hormuz.
US Futures Struggle for Direction
At 02:56 ET (06:56 GMT), futures on the S&P 500 were down 14 points, or 0.2%, while Dow Jones futures fell 260 points, equivalent to 0.5%.
Nasdaq 100 futures moved slightly higher, gaining 21 points, or 0.1%.
The cautious opening followed a mixed session on Wall Street on Monday, when falling oil prices initially supported equities before renewed selling in technology stocks weighed on the major indices.
The Nasdaq Composite ended the session 1.07% lower as investors continued to question whether the rapid expansion of artificial intelligence infrastructure could justify the substantial capital being committed to the sector.
Technology companies have increasingly relied on debt issuance and equity financing to fund data centre construction and computing capacity.
That dependence has raised questions about the ability of financial markets to continue supporting elevated investment levels.
Analysts at Vital Knowledge cautioned that spending could eventually be reduced if investors become less willing to finance the expansion.
“If the markets cannot absorb the debt and equity financing, the industry’s capital spending will inevitably have to be reduced,” the analysts said.
Apple Reports Higher Earnings but Issues Weaker Margin Guidance
Apple delivered fiscal fourth-quarter results above analyst forecasts, reporting a 14% increase in earnings per share to $2.10.
Revenue reached $114.5 billion, also exceeding Wall Street expectations.
However, the company’s performance was less convincing in some international markets.
Sales in China totalled $17.5 billion, below forecasts, while demand in Japan also fell short of expectations.
Apple generated free cash flow of $26.8 billion, missing consensus projections despite maintaining substantial cash generation compared with many technology companies investing heavily in artificial intelligence.
The company’s shares had advanced more than 24% since the beginning of 2026, partly because investors viewed its business as less directly exposed to the financing risks associated with large-scale AI infrastructure projects.
Nevertheless, the latest outlook highlighted a potential challenge to profitability.
Apple expects gross margins of 45% to 46% in the current quarter, below the approximately 47% anticipated by analysts.
The company indicated that rising memory chip prices would increase production costs during the important holiday shopping period.
The margin pressure represents an early challenge for new Chief Executive Officer John Ternus.
Higher Component Prices Shift Focus to Apple’s Profitability
Analysts at Evercore ISI said Apple’s results suggested that underlying demand for its products remained healthy despite recent price increases.
However, they noted that investors were paying greater attention to the company’s ability to maintain profitability as component costs rise.
“Investor attention is increasingly turning to margins and the company’s capacity to grow earnings per share,” the analysts wrote.
Evercore expects gross margin conditions to remain uncertain until memory chip prices stabilise or begin to decline.
The issue extends beyond Apple, as higher semiconductor costs could affect manufacturers throughout the consumer electronics industry.
Companies may have to accept lower margins or increase prices to offset additional expenses, potentially affecting customer demand.
Palantir’s Revenue Nearly Doubles but Bookings Growth Weakens
Palantir Technologies reported a 96% increase in third-quarter revenue to $2.31 billion, supported by demand from commercial customers and US government agencies.
Earnings per share reached $0.44, exceeding analyst estimates.
The company also provided fourth-quarter forecasts above market expectations.
Palantir anticipates revenue between $2.649 billion and $2.653 billion, with operating income expected to range from $1.64 billion to $1.644 billion.
Despite the strong results, the company’s shares declined in extended trading.
Investors focused on the slowdown in total contract value growth, an indicator used to assess the value of new business agreements and potential future revenue.
The metric increased 6% year on year in the third quarter, compared with 49% growth in the second quarter.
The sharp deceleration raised concerns about the pace of new contract commitments, even as the company’s existing operations continued to generate substantial revenue growth.
William Blair Flags Contract Value Concerns
Analysts at William Blair recognised the strength of Palantir’s financial performance but suggested that the weaker contract value indicator could weigh on investor sentiment.
They described the earnings release as “another outstanding set of results”, while warning that uncertainty surrounding bookings could limit the stock’s immediate reaction.
The figures highlight a distinction between current revenue performance and indicators of potential future growth.
Although Palantir’s fourth-quarter guidance points to continued expansion, investors will be watching whether new contract activity strengthens in subsequent reporting periods.
Midterm Elections Could Reshape US Policy Priorities
Tuesday’s US midterm elections are another important consideration for financial markets.
Voters will determine the composition of the House of Representatives and Senate during the remainder of President Donald Trump’s second term.
Republicans currently control both chambers, although the election could alter the balance of political power.
Artificial intelligence has emerged as a significant issue, with concerns about employment, energy consumption and the construction of large data centres attracting public attention.
President Trump has promoted the expansion of the US AI industry as part of efforts to maintain a technological advantage over China.
However, the economic and social consequences of rapid AI development have become increasingly prominent in political discussions.
Household affordability is another major concern for voters.
The conflict involving the United States and Iran has contributed to higher energy prices, increasing gasoline and diesel costs.
Although consumer spending and AI-related investment have supported US economic growth, higher living expenses remain a source of pressure for households.
Changes in congressional control could influence future decisions on technology regulation, energy policy and federal spending.
Oil Recovers Following Reported Strike on Iranian Island
Crude prices rose on Tuesday after a sharp decline in the previous session.
The recovery followed a Wall Street Journal report that US forces had carried out a strike against Iran’s Qeshm Island on Monday.
The newspaper cited American officials who described the operation as part of a series of limited military actions in recent weeks.
According to the report, Washington was seeking to avoid suggesting that it intended to resume a broader military campaign.
Qeshm Island is situated in the Strait of Hormuz, a strategically important route for international oil shipments.
Military developments in the area have heightened concerns about possible disruption to energy transportation.
Oil prices had fallen on Monday after US officials indicated that negotiations with Iran remained preferable to a wider military escalation.
The subsequent recovery demonstrated the sensitivity of crude markets to developments in the conflict.
Further military action could increase concerns about supply disruptions, while progress towards negotiations could reduce geopolitical risk premiums.
Market Outlook
Investors face a combination of corporate earnings developments, political uncertainty and geopolitical risks.
Apple’s quarterly earnings beat was overshadowed by concerns about rising component costs, while Palantir’s rapid revenue growth was accompanied by a slowdown in contract value expansion.
Both reports have increased scrutiny of technology sector profitability and the sustainability of AI-related investment spending.
The US midterm elections could influence future economic policy, while developments involving Iran remain an important driver of energy prices.
With futures showing limited direction, investors will continue assessing company guidance, political developments and signals about the outlook for global growth.
