* Futures down: Dow 1%, S&P 500 1%, Nasdaq 1.4%

* Oil surge reignites inflation worries

* Alphabet falls after hiking FY capex guidance

* Lockheed Martin ( LMT ) gains after lifting 2026 forecasts

* ServiceNow ( NOW ) jumps as co raises annual subscription revenue

forecast

(Updates before markets open)

By Ragini Mathur and Avinash P

July 23 (Reuters) - U.S. stock indexeswere on track to open

lower 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

further dampened sentiment.

Second-quarter results from Alphabet and Tesla

, the first of the so-called "Magnificent Seven" megacap

companies to report this season, failed to impress investors.

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.

Shares of Google's parent fell 5.4% in premarket trading.

Tesla dropped 7.7% after reporting negative free cash flow

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

years.

"Alphabet is spending hundreds of billions of dollars as it

looks to stay ahead in the AI arms race," said AJ Bell

investment director Russ Mould.

"But there is still a healthy degree of scepticism about the

ability of these investments to generate a commensurate level of

return."

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 if 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.

U.S. President Donald Trump said he would hold Iran

accountable for any attacks by Yemen's Houthi militants.

Brent crude futures rose to just shy of $100 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%.

The number of Americans seeking unemployment benefits for

the first time fell sharply last week, leaving Fed officials to

keep their focus on containing inflation.

At 8:48 a.m. ET, Dow E-minis were down 527 points,

or 1%, and S&P 500 E-minis were down 74 points, or

0.98%. Nasdaq 100 E-minis were down 408.5 points, or

1.4%.

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

mixed. Texas Instruments ( TXN ) fell 4.8% despite forecasting

quarterly revenue above estimates.

Defense giant Lockheed Martin ( LMT ) rose 4.8% after

lifting 2026 sales and profit forecasts.

ServiceNow ( NOW ) gained 5.3% after the enterprise software

company raised its annual subscription revenue forecast for the

second time.