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Updates with analyst comment, Home Depot results

By Johann M Cherian and Sukriti Gupta

Feb 25 (Reuters) - U.S. stock index futures edged lower on Tuesday after chip and megacap stocks lagged, with AI leader Nvidia down a day before its quarterly results, as investor concerns over the Trump administration's trade policies dampened market sentiment.

Nvidia NVDA.O fell 0.7% in premarket trading after a report that the U.S. was planning further restrictions on the company's chip exports to China.

The report also said Washington was consulting with allies including Japan and the Netherlands about tightening chip controls over China.

At 07:10 a.m. ET, Dow E-minis 1YMcv1 were mostly unchanged, S&P 500 E-minis EScv1 were down 2.75 points, or 0.05% and Nasdaq 100 E-minis NQcv1 were down 43 points, or 0.2%.

"A lot of people are wondering about what capacity China actually has even without these chips being bought from U.S. companies, when you look at what DeepSeek was able to do," said Danni Hewson, head of financial analysis at AJ Bell.

"Clearly, Donald Trump wants to make sure that the United States stays ahead in the AI game, but there will be some casualties in terms of (the) cash that these big companies can make."

Other semiconductor stocks in the red included Broadcom AVGO.O, which was down 0.2%, and Advanced Micro Devices AMD.O, which lost 0.4%. Chip-gear maker Lam Research LRCX.O fell 1.3%.

Nvidia's results on Wednesday will be key for technology companies as investors question the industry's hefty artificial-intelligence spends after low-cost competition from China's DeepSeek rattled markets in January. The S&P 500 technology sector .SPLRCT is on track for its first quarterly decline since July 2023, if losses hold.

Megacaps such as Microsoft MSFT.O and Meta Platforms META.O were down 0.4% and 0.3%, respectively.

Tempering risk-taking, U.S. President Donald Trump said late on Monday that tariffs on Canadian and Mexican imports were "on time and on schedule" ahead of the March 4 deadline.

The U.S. and China are already in a trade war and Trump signed an order last week restricting Chinese investments in strategic areas including semiconductors, artificial intelligence, biotechnology and aerospace.

Along with the potential global impact of these levies, investors are also wary of signs the domestic economy is stalling and that the U.S. Federal Reserve is cautious about cutting interest rates further.

Interest rate futures currently point to a cut of 25 basis points in July and traders are pricing in another reduction before the end of the year, according to data compiled by LSEG.

The Conference Board's gauge for consumer confidence is due at 10 a.m. ET, days after the University of Michigan's index showed consumer sentiment was deteriorating.

Chicago Fed President Austan Goolsbee said late on Monday that the Fed needs more clarity on the total economic impact of the Trump administration's new policies before it can act.

Policymaker Thomas Barkin and Fed Vice Chair for Supervision Michael Barr are expected to speak through the day.

Crypto stocks also fell, with Coinbase COIN.O down 4.3% and MicroStrategy MSTR.O down 4.6%, tracking bitcoin BTC= prices, which touched a more than three-month low.

Zoom Communications ZM.O lost 3.5% after forecasting annual revenue below estimates, while U.S.-listed shares of Li Auto LI.O jumped 14.1% after it unveiled its first electric SUV.

Home Depot HD.N fell 1.7% after the home-improvement chain forecast annual same-store sales growth below analysts' estimates.

(Reporting by Johann M Cherian in Bengaluru; Editing by Devika Syamnath and Pooja Desai)

((johann.mcherian@thomsonreuters.com;))