The rally, which followed a similarly reassuring report from Microsoft earlier in the week, helped the Nasdaq climb 1% to 25,373.85 and the Dow Jones Industrial Average rise 0.5% to 52,485.03. The S&P 500 added 0.7% to close at 7,489.72, even as declining stocks outnumbered advancers by a 1.3-to-one ratio.
Amazon Earnings Quell AI Spending Doubts
Fears that companies were overinvesting in AI data centers without near-term returns rattled global markets earlier in July, dragging the Nasdaq down 3.2% for the month. Amazon’s results, combined with Microsoft’s stronger-than-expected cloud growth forecast, reframed that narrative. Microsoft rose another 3% on Friday, building on its biggest one-day percentage gain since 2008.
“There were worries that Amazon’s spending was just moonshot spending, that it’s irresponsible spending, and Andy Jassy just put those fears to bed,” said Jake Dollarhide, CEO of Longbow Asset Management in Tulsa, Oklahoma.
Monolithic Power Systems rose over 8% after forecasting third-quarter revenue above estimates, another signal that AI-linked demand remains intact.
Apple’s Slump Caps Tech Sector Gains
Not every heavyweight participated. Apple tumbled 7.4% after warning that supply constraints would hamper growth, compounding concerns that recent iPhone price increases could soften consumer demand. The decline was severe enough to leave the S&P 500 technology index down 0.5% for the session, despite broad strength elsewhere in tech.
The PHLX chip index edged up just 0.1% and remains more than 20% below its June 22 record close, underscoring how uneven the AI rally has become across semiconductors.
Valuations and Earnings Set the Backdrop
Trading volume was heavy, with 20.6 billion shares changing hands on US exchanges versus a 20-session average of 17.1 billion. For the week, the S&P 500 rose 1.1% and the Nasdaq added 1.6%. Both indices are up roughly 9% year-to-date in 2026.
Analysts on average expect S&P 500 aggregate second-quarter earnings to soar 48% from a year ago, with AI-related stocks driving much of that growth, according to LSEG I/B/E/S. Strong forecasts and the recent pullback in share prices have left the S&P 500 trading at about 20 times expected earnings, slightly above its 10-year average of 19 times.
What Happens Next
Investors will scrutinize upcoming corporate commentary on AI capital expenditure for evidence that spending translates into revenue. Amazon’s results suggest the market will reward companies that can demonstrate returns, while punishing those that cannot. Apple’s supply-chain warning introduces a second risk vector: if hardware constraints persist into the holiday quarter, consumer-facing tech could drag on the S&P 500 even as cloud and AI names advance. Watch the PHLX chip index for confirmation of whether semiconductor demand is stabilizing or still sliding from June highs.
— Nadia Okonkwo, business desk, AXO News