A dramatic week of Big Tech earnings left Wall Street sharply divided, with Amazon and Microsoft posting massive gains after strong quarterly results while Apple and Meta suffered steep sell-offs on disappointing outlooks. The Nasdaq-100 saw approximately $2 trillion shift between the six megacap companies that reported earnings this season.
Amazon surged 11.7% after reporting better-than-expected second-quarter results, with the e-commerce and cloud giant raising its 2026 capital expenditure outlook to approximately $220 billion, primarily for AWS and artificial intelligence infrastructure. Despite the elevated spending, Amazon posted a record operating margin of 13.7%, reassuring investors that its AI investments are translating into returns.
Microsoft gained 8% in its best day since 2008 after the software giant reported fiscal fourth-quarter earnings that beat expectations and committed to remaining free cash flow positive through fiscal year 2027. Investors came away confident in Microsoft’s AI strategy, and the stock added another 2.5% on Friday, extending its post-earnings rally.
The contrast with Apple was stark. Shares fell 7.8% after the iPhone maker issued fiscal fourth-quarter revenue guidance that disappointed Wall Street, raising questions about the company’s ability to monetize AI features across its hardware lineup. Meta also cratered, dropping 10% despite strong quarterly numbers, as investors worried about the social media giant’s spending trajectory.
Alphabet fell 15% in the week’s most severe megacap decline, even after posting solid results, as the market punished any sign of elevated AI spending without immediate revenue justification. The mixed reactions underscored a growing investor discernment: markets are no longer rewarding AI investments broadly but are instead demanding clear evidence of returns.
The broader market impact was uneven. The Dow edged higher on July 31, supported by Amazon’s surge, while bond yields continued to climb as investors digested the inflationary implications of massive corporate spending plans. The Federal Reserve’s recent decision to hold interest rates at 3.50%-3.75% left markets searching for direction as rate hike expectations linger.
South Korea’s chip heavyweights SK Hynix and Samsung Electronics rallied sharply in Seoul, tracking the U.S. tech rebound. The PHLX Semiconductor Index jumped 8.2%, snapping a five-day losing streak, as investors bet that the AI spending boom would continue to drive demand for advanced chips despite near-term uncertainty.
For the wider market, the earnings season has revealed a two-speed tech sector. Companies with proven AI monetization like Microsoft and Amazon are rewarded, while those still investing heavily without clear near-term returns face investor skepticism. The Nasdaq-100’s roughly 7% decline in July, its steepest monthly drop since March 2025, suggests the AI trade is entering a more selective phase.
Sources: CNBC – Amazon, Microsoft, Alphabet Added $1.5T in Combined Value, TheStreet – Stock Market Today July 31, Schwab – Stocks Build on Rally Led by Tech and Amazon
Author: Finance Desk
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