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 growth of artificial intelligence. Amazon shares surged over 9% in extended trading after the company reported better-than-expected revenue, aided by its cloud-computing business. This followed a powerful rally by Microsoft, which saw its stock jump 16% after posting stronger-than-expected Azure cloud growth. These results from the "Magnificent Seven" tech giants reassured investors who had been concerned about a potential slowdown in AI development and 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. While tech stocks rallied, 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. Despite the volatility, major averages remained on track to finish higher, with the Nasdaq Composite leading the gains.