Futures tied to the Nasdaq index rose on Wednesday after a bullish forecast from Advanced Micro Devices drove chip stocks higher even as Microsoft faltered, while investors geared up for the Federal Reserve's rate decision.

AMD soared 8.3% in premarket trading after lifting its 2024 forecast for AI chip sales. Nvidia rose 6.5%, Intel 2.3% and Broadcom 6.4%.

"(AMD) is a long way from stealing Nvidia's crown as the king of artificial intelligence, but it is making a dent with demand for AI processors helping sales to data centres more than double," said Derren Nathan, head of equity research at Hargreaves Lansdown.

At 7:15 a.m. ET, Dow e-minis were up 31 points, or 0.08%, S&P 500 e-minis were up 52 points, or 0.95%, and Nasdaq 100 e-minis were up 295.5 points, or 1.56%.

Megacap tech and chip stocks have taken a hit this month, after steering the U.S. equity market to record highs in 2024, on euphoria around AI adoption and the prospect of early rate cuts from the U.S. Federal Reserve. Investors, who now see value in underperforming sectors, have started rotating away from megacaps.

The Philadelphia SE Semiconductor index is set to log its first monthly decline in three and its worst month since September 2022.

The Nasdaq and the S&P 500 - market-cap weighted indexes which are heavily inclined towards expensive tech stocks - are also set for their weakest month in three, while the price-weighted Dow is on track for its best monthly performance since last December.

Microsoft lost 2.9% as it plans to spend more this fiscal year to build its AI infrastructure, even as growth in its cloud business slowed - another sign that the payoff from hefty investments in the technology might take longer than hoped.

Megacaps such as Alphabet, Meta Platforms and Tesla were up between 0.2% and 0.7%.

Meta will report earnings after markets close, while results for Apple and Amazon are due on Thursday.

Quarterly results from tech giants Tesla, Microsoft and Alphabet have so far disappointed investors, who are questioning if the AI-led rally has run out of steam.

Investors are now focusing on the centerpiece event of the week - the Fed's decision and commentary on interest rates. The central bank is expected to hold rates steady and open the door for a September rate cut.

With traders fully pricing in a cut by September, according to CME's FedWatch, they fear that any disappointment on this front could amplify the recent equity selloff.

The S&P 500 and the Nasdaq fell on Tuesday, weighed by chip and megacap shares, while the Dow outperformed in a fading sector rotation.

The ADP National Employment reading for July, due at 8:15 a.m. ET, is also on investors' watch list after Tuesday's U.S. job openings data pointed to continued labor resilience underpinning the economy.

Among others, T-Mobile raised its full-year forecast for monthly bill-paying phone subscriber additions, sending the carrier's shares up 3.2%.

Starbucks rose 3.4% after its store operation improvements helped meet quarterly profit expectations.

Pinterest slumped 10.6% after forecasting current-quarter revenue below expectations, while Match Group jumped 10% after a second-quarter revenue beat and plans to lay off about 6% of its staff.

(Reporting by Ankika Biswas and Johann M Cherian in Bengaluru; Editing by Pooja Desai and Saumyadeb Chakrabarty)