* Futures up: Dow 0.5%, S&P 0.4%, Nasdaq 1.15%

* Amazon ( AMZN ) jumps as AWS growth soothes fears over rising AI

spending

* Apple ( AAPL ) slides as supply snags cloud outlook

* July selloff puts chip index on track for worst month

since 2008

(Updates before markets open)

By Johann M Cherian and Ragini Mathur

July 31 (Reuters) - The Nasdaq was set to open higher and

lead gains among Wall Street's main indexes on Friday, boosted

by Amazon's ( AMZN ) 10.5% jump after the Big Tech company

joined some of its peers in delivering strong cloud revenue

growth, putting to rest concerns about AI returns.

Limiting some optimism, Apple ( AAPL ) warned that supply

constraints would hurt growth, prompting investors to look

beyond near-term shortages to gauge the hit from an expected

iPhone price hike as its shares dropped 7.8% in premarket

trading.

This week was what some analysts called 'make-or-break' for

the tech sector that had been rattled by investors taking some

profits through July following a strong end to the second

quarter, as they awaited signs that investments made by AI

leaders at the expense of free cash flow were paying off.

Amazon ( AMZN ) reported its biggest revenue growth in over four

years for the previous quarter on Thursday, joining similar

reports from Microsoft ( MSFT ) and Alphabet earlier

this month, prompting investors to look past the big drop in

cash flows that the companies also logged.

"Amazon ( AMZN ) showed us, without a shadow of a doubt, that the

web-services or AI side of the business is driving growth for

the company," said Adam Sarhan, chief executive of 50 Park

Investments in New York.

"Investors are able to look past the free-cash-flow decline

because it is one component. If growth continues, it will make

up for that shortfall."

Shares of Microsoft ( MSFT ) dipped 0.1% after logging its biggest

one-day gain on record for a company in the previous session,

while Alphabet, Meta and Tesla rose about 1%

each. Among chip stocks, Nvidia ( NVDA ) climbed 0.8% and Micron

gained 3.6%.

At 7:23 a.m. ET, Dow E-minis were up 284 points, or

0.54%, and S&P 500 E-minis were up 30.25 points, or

0.4%. Nasdaq 100 E-minis were up 325 points, or 1.15%.

TOUGH MONTH FOR STOCKS

All three of Wall Street's main indexes are on track for

weekly gains, aided by the strong rebound late this week, but

are on track for monthly losses reflecting the sharp selloff

AI-linked stocks witnessed through July.

The Philadelphia Semiconductor index is still down

over 20% in July, which would mark its biggest monthly fall

since the housing bubble burst in late 2008. Investors instead

took notice of other sectors, as the S&P 500 equally weighted

index is on track for its fourth-straight month of

gains.

"This momentum crash was tremendous and the positioning has

been rinsed," said Laurent Clavel, global head of multi-asset at

AXA Investment Managers, BNP Paribas Asset Management.

"Going into August, if anything, we are going back into it

slowly. We're buying this weakness and we're re-buying this AI

narrative," Clavel said.

The week also brought uncertainty in terms of interest rates

after the Federal Reserve left its benchmark rate on hold.

Chairman Kevin Warsh's commentary and a broadly benign inflation

report on Thursday led investors to price in a 35% chance that

rates will remain unchanged in September- up from about 18% last

week, according to CME's FedWatch tool.

The University of Michigan's July consumer sentiment survey

is due at 10 a.m. ET.

Chipmaker Monolithic Power Systems gained 11% after

forecasting third-quarter revenue above estimates. Domain

registrar GoDaddy ( GDDY ) lost 16% after narrowing its annual

revenue forecast.