(Updates prices to late afternoon trading)

* Indexes mixed: Dow up 0.17%, S&P 500 up 0.03%, Nasdaq down

0.29%

* Chip index rises while software index sinks

* AT&T ( T ) jumps after strong wireless subscriber additions in

Q2

* Alphabet, Tesla to report Q2 results after the bell

By Sinéad Carew and Ragini Mathur

July 22 (Reuters) - The S&P 500 was barely higher on

Wednesday, while the Nasdaq dipped as technology stocks were

mixed, with investors awaiting earnings reports to gauge the

health of the market rally driven by artificial intelligence.

After months of gains that lifted the major indexes from

their March lows, momentum has been wobbling with uneven trading

in heavyweight semiconductor stocks and weakness in software

stocks.

The Philadelphia SE Semiconductor index was last up 1%,

bouncing off early losses. The index was angling for its third

straight day of gains after three days of losses that had

confirmed it was in a bear market last week.

Investors were preparing for second-quarter results from

Alphabet and Tesla, the first of the

so-called "Magnificent Seven" megacap companies to report after

the bell for fresh evidence that these companies'

multibillion-dollar investments in AI are paying off.

"Investors have become a lot more discerning and specific as to

where they're choosing to invest in the AI trade," said Kevin

Gordon, head of macro research and strategy at Charles Schwab ( SCHW ).

Gordon noted that software stocks fell while chip stocks rose

during the session.

At 2 p.m., the Dow Jones Industrial Average rose 90.16

points, or 0.17%, to 52,312.64, the S&P 500 rose 2.61

points, or 0.03%, to 7,511.46 and the Nasdaq Composite

fell 75.47 points, or 0.29%, to 25,761.74.

Alphabet, whose shares were up 0.3%, will be under scrutiny

after a delay in the launch of a model central to its AI

ambitions. Texas Instruments ( TXN ), also due to report after

the close, ticked nearly 1% higher.

"Companies have to prove not only that they are growing, but

that they are worthy of a premium valuation," said Bret Kenwell,

U.S. investment analyst at eToro.

"Good reports right now are not good enough. They need to be

great. And that's the market we're in right now."

Among the benchmark index's 11 major industry sectors, just

six were advancing with utilities up 2% and leading

gains followed by materials, up 1.4%.

Consumer discretionary, the biggest laggard, was

down 1%.

The S&P 500 information technology sector swung between

losses and gains during the session but was last up 0.05%, with

support from gains in AI-linked chip stocks such as Nvidia ( NVDA )

, Broadcom ( AVGO ) and Advanced Micro Devices ( AMD ).

The S&P 500 software and services index was down

2.9%.

Super Micro Computer ( SMCI ) shares were up 21% after the

server maker said it had secured more than $60 billion in new

orders in the fourth quarter. Peers Dell Technologies ( DELL )

and Hewlett Packard Enterprise ( HPE ) climbed about 10% and

nearly 5%, respectively, after Super Micro also reported upbeat

preliminary results.

The broader megacap complex was weaker, with Microsoft ( MSFT )

, Amazon ( AMZN ), Apple ( AAPL ) and Meta Platforms ( META )

providing the biggest drags to the S&P 500.

The crowded earnings calendar leaves markets vulnerable to

sharper swings this week, while geopolitical tensions added

another layer of caution.

Fighting in the Middle East remained in focus as threats to

shipping by Yemen's Iran-backed Houthi militia, alongside a

widening conflict, disrupted two of the world's most important

energy chokepoints.

President Donald Trump vowed on Wednesday to destroy an Iranian

bridge or power plant every time Iran shoots at a ship in the

Strait of Hormuz.

Oil prices climbed to near six-week highs, complicating the

outlook for central bankers.

"Excluding the megacap AI trade, there's an element of what's

going on with oil that's driving the market," said Schwab's

Gordon, noting that high oil prices are fanning inflation

worries. "People are being defensive with utilities, but with

energy and materials being higher, that's the inflation

component."

The Federal Reserve is expected to keep interest rates steady

for the rest of 2026, according to the median forecast in a

Reuters poll of economists. Still, respondents said the risk of

a rate hike remained elevated.

Traders are pricing in a more than 68% chance the Fed leaves

rates unchanged at next week's meeting, CME Group's FedWatch

tool showed.

Among other movers, AT&T ( T ) rose 2.6% after the telecom firm

added more wireless subscribers than expected in the second

quarter. Philip Morris International ( PM ) gained 2.9% after

stronger cigarette demand helped the company beat quarterly

results estimates.