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* Futures down: Dow 0.4%, S&P 500 0.4%, Nasdaq 0.4%

July 23 (Reuters) - U.S. stock index futures dipped on

Thursday as concerns over heavy AI spending resurfaced after the

first batch of Big Tech earnings, while another jump in oil

prices linked to the widening Middle East conflict weighed on

sentiment.

Investors offered a downbeat reaction to earnings from

Alphabet and Tesla, the first of the

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

season.

Alphabet posted its strongest-ever quarter of growth in its

cloud computing business, but the results did little to reassure

investors as attention shifted to its higher spending plans.

The Google parent's shares fell 3.9% in premarket trading.

Tesla dropped 5.8% after reporting negative free cash flow

for the second quarter for the first time in more than two

years.

"Alphabet and Tesla are showing two very different stages of

the AI investment cycle," said Lale Akoner, global market

strategist at eToro.

"Alphabet is beginning to show that connection. Tesla still

needs to prove that its ambitious projects can move from

technological promise to commercial returns."

Capital spending plans will remain in focus when other major

technology companies report next week, as investors question

whether the huge sums being poured into AI are translating into

meaningful returns, and whether profit growth can justify

elevated stock valuations.

Geopolitical concerns added to the pressure. After months of

investor focus on the Strait of Hormuz, attention has shifted to

the Red Sea, where Iranian-aligned Houthis, who control areas

near the Bab el-Mandeb strait, have opened a new front in the

Middle East crisis.

Brent crude futures rose to $98 a barrel, their highest

level since early June.

The surge in oil prices revived inflation worries, pushing

interest-rate-sensitive 2-year Treasury yields to a 17-month

high as traders increased bets on a Federal Reserve rate hike as

early as next week.

Markets are now pricing in about a 35% chance of a

25-basis-point increase at the Fed's July meeting, up from 12% a

week ago, according to CME's FedWatch tool. Expectations for a

similar move in September stand at 55%.

At 5:37 a.m. ET, Dow E-minis were down 225 points,

or 0.43%, and S&P 500 E-minis were down 29.25 points, or

0.39%. Nasdaq 100 E-minis were down 109 points, or

0.37%.

Chip stocks, which have recently hit a volatile patch, were

mixed. Texas Instruments ( TXN ) fell 5.2% despite forecasting

quarterly revenue above estimates.

Health insurer Molina Healthcare ( MOH ) tumbled 8.8% even

after raising its annual profit forecast and posting

stronger-than-expected second-quarter results.

ServiceNow ( NOW ) jumped 8.1% after the enterprise software

company raised its annual subscription revenue forecast for the

second time.