* Futures: Dow up 0.5%, S&P down 0.13%, Nasdaq down 1.04%

* Chip stocks lead declines in premarket trading

* Amazon ( AMZN ), Meta, Apple ( AAPL ) and Microsoft ( MSFT ) to report later this

week

* Traders see a 35.8% chance of a Fed rate hike this week

(Updates prices throughout)

By Johann M Cherian and Ragini Mathur

July 28 (Reuters) - Nasdaq futures fell on Tuesday,

mirroring a cautious mood across global markets toward AI chip

stocks on concerns about hefty corporate spending and rising

Chinese competition, ahead of earnings from some of the biggest

companies on Wall Street.

Chip bellwethers such as Nvidia ( NVDA ) fell 1%, Micron

slid 5.5% and Applied Materials ( AMAT ) lost 4.3% in

premarket trading, while U.S.-listed shares of Taiwan's TSMC

and Korea's SK Hynix fell 3.4% and 4.8%,

respectively.

Global markets have become increasingly volatile this month

as investors have scrutinized the need for more corporate

spending on AI infrastructure such as semiconductors that

underpinned strong gains in chip stocks in the previous quarter.

Roundhill's Memory Exchange Traded Fund lost 7.4%

on Tuesday and has been trading below its 50-day moving average

for the past two weeks, reflecting weak short-term momentum,

while the Philadelphia SE Semiconductor Index has fallen

over 20% from its all-time high hit in June.

Signs that Wall Street's biggest companies such as Alphabet

and Tesla are running out of cash to fund

their ambitions have also made markets nervous, while China

showcases cheaper AI models and deepens its presence in the

competitive semiconductor industry.

"Should Microsoft ( MSFT ), Amazon ( AMZN ) or Meta also announce a similar

dive in their free cash flow levels, that will also reignite the

worries that these companies will continue to spend, but the

extra spending will have to be on stock and bond issuance," Ipek

Ozkardeskaya, a senior analyst at Swissquote, said.

When AI hyperscalers Amazon.com ( AMZN ), Meta,

Apple ( AAPL ) and Microsoft ( MSFT ) report earnings later this

week, investors will be keen to see if their investments, worth

over several hundred billion dollars, are yielding returns. The

reports are also expected to offer clues on the demand for chips

and other AI infrastructure.

Shares of the four U.S. companies were marginally higher on

Tuesday.

At 7:04 a.m. ET, Dow E-minis were up 262 points, or

0.5%, and S&P 500 E-minis were down 9.75 points, or

0.13%. Nasdaq 100 E-minis were down 293.5 points, or

1.04%.

The Federal Reserve is due to announce its interest-rate

decision on Wednesday. Traders see a 35.8% chance of a rate hike

this week, according to LSEG data, and expect borrowing costs to

rise by at least 25 basis points by year-end.

Higher rates could further pressure AI companies that are

becoming more dependent on debt financing.

Oil prices offered some relief, falling 2.5% to a one-week

low as a fragile U.S.-Iran ceasefire appeared to hold despite

reports of drone attacks in Saudi Arabia, Jordan and Iraq.

President Donald Trump said the U.S. was having "good talks"

with Iran and that a deal to end the conflict was possible.

Later on Tuesday, the Conference Board's July consumer

confidence report could provide a clearer picture of how the

conflict is affecting household sentiment.

Among others, Johnson & Johnson ( JNJ ) rose 2.3% after

saying it would pay an estimated $5.5 billion to resolve tens of

thousands of lawsuits alleging its talc products caused cancer.

Coca-Cola gained 2.6%, as the beverage company raised

its annual revenue and profit forecasts.