Amazon and Microsoft Earnings Boost Investor Confidence in Artificial Intelligence Spending
Amazon and Microsoft reported strong second-quarter earnings, reinforcing investor confidence in the continued expansion of artificial intelligence technology. Amazon shares surged over 9% in extended trading after the company reported better-than-expected revenue, bolstered by its cloud-computing business. Meanwhile, Microsoft saw a historic 15% stock rally following stronger-than-expected Azure cloud growth. These results from the "Magnificent Seven" tech giants reassured investors who had previously feared a slowdown in AI development or rising interest rates. The four hyperscalers—Amazon, Microsoft, Meta, and Alphabet—forecasted a cumulative spending of $720 billion to $745 billion on capital projects for 2026. Despite these tech gains, the broader market showed signs of volatility. The 10-year Treasury yield reached its highest level since January 2025 as investors assessed the Federal Reserve's decision to hold interest rates steady. Additionally, oil prices remained elevated due to the ongoing US-Iran war, which has kept energy prices high for consumers while providing windfalls for major oil companies like ExxonMobil and Chevron.