Morning in New York: The "bulls" are back in the AI sector

A daily review and forecast of events in the U.S. stock market by Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research.

The trend of upcoming trading will be largely determined by rising demand for shares of major technology companies and issuers related to AI infrastructure. The positive momentum sparked by Microsoft’s (MSFT) earnings report was bolstered by results from Amazon’s (AMZN) cloud segment: AWS revenue rose by 37%—the highest increase in the past four years—to $42.2 billion. The company raised its capital expenditure plan amid high demand for AI computing power. A significant portion of this capacity has already been reserved by customers. This is supporting a rebound in tech sector stocks and easing concerns about a lack of return on major investments in AI development.

Expectations also provided additional support, that the recent sell-off in the AI sector may have largely run its course following the liquidation of positions by the hedge fund Situational Awareness, which suffered significant losses during the AI stock decline and exited publicly traded assets. This reduced the risk of further technical pressure on the sector. Against this backdrop, the negative reaction to Apple’s (AAPL) earnings appears secondary to the overall market dynamics. Earnings reports from tech giants, with the exception of Meta Platforms (META), confirm that AI spending is already driving revenue growth.

The performance of Asian markets provided strong evidence of a return to optimism regarding the prospects for AI. South Korea’s Kospi soared nearly 17% thanks to a rebound in shares of chipmakers and AI-related companies. The rise in Samsung Electronics and SK Hynix shares reinforces the positive external backdrop for U.S. manufacturers of semiconductors and memory chips, as well as suppliers of data center equipment.

The impact of geopolitical factors has taken a back seat for the markets. The U.S. continues to carry out strikes on Iranian targets. Shipping through the Strait of Hormuz and the Red Sea remains difficult. At the same time, Washington is leaving the door open for negotiations, and oil prices are not showing any new sharp spikes, although the military risk premium remains significant for energy and transportation companies.

This Friday will see the release of the July Chicago Manufacturing Activity Index (consensus: 56 points; June: 56.7 points) and the final reading of the University of Michigan's Consumer Sentiment Index for July (consensus: 54 points; May: 54.4).

Before the main session opens, AbbVie (ABBV), Exxon Mobil (XOM), Chevron (CVX), Linde (LIN), Eaton (ETN), Moderna (MRNA), and Colgate-Palmolive (CL) will report their quarterly results.

Futures on U.S. stock indices are showing positive momentum. We assess the risk balance for the upcoming session as positive, with elevated volatility. The market is being supported primarily by a resurgence in demand in the technology sector. The negative trend in Apple’s stock price and geopolitical risks are not exerting significant pressure on buyers.

— Apple (AAPL) shares are down about 7%, even though its revenue and earnings for the third quarter of the fiscal year exceeded expectations, and iPhone and Mac sales rose significantly. Pressure on the stock price came from the forecast for the current quarter, which anticipates a slowdown in revenue growth and earnings from the services business, as well as constraints related to the production of cutting-edge components.

— Stryker (SYK) are falling nearly 8%, despite the fact that its total revenue and adjusted earnings per share (EPS) came in at $6.6 billion and $3.69, compared to consensus estimates of $6.58 billion and $3.49, respectively. The negative reaction is linked to the results of the company’s largest segment, surgical equipment and neurotechnology, which posted sales of $3.6 billion against a forecast of $3.72 billion.

— Monolithic Power Systems (MPWR) shares are rising by more than 10% as the company’s revenue for the quarter increased by 47.6% year-over-year, reaching a record $980.6 million. The Enterprise Data segment showed particularly strong growth, with sales rising 44.8% quarter-over-quarter and 164.3% year-over-year, driven by high demand for AI and server solutions.

— Coinbase (COIN) shares are down about 5% as the company reported its third consecutive quarterly loss amid declining activity in the crypto market and falling trading volumes. Revenue from the subscriptions and services segment fell 12.2% to $555.1 million, which only added to the downward pressure on the stock price.

Trading on July 30 on U.S. stock markets closed with solid gains, near intraday highs. The S&P 500 gained 1.66%, the Nasdaq 100 rose 3.36%, the Dow Jones climbed 1.19%, and the Russell 2000 advanced 1.37%. The main positive driver was the aforementioned rebound in the share prices of semiconductor manufacturers—including memory chip makers—and companies involved in AI infrastructure.

The gains were notably concentrated in the largest tech stocks. The equally weighted S&P 500 lagged behind the broad index by more than 180 basis points after six sessions of outperformance. Among the “Magnificent Seven,” Microsoft (MSFT: +15.51%) significantly outperformed the market, reporting impressive Azure results and issuing an optimistic outlook. Meta Platforms (META: -7.95%) saw heavy selling amid uncertainty surrounding the return on investment in AI.

The IT sector emerged as the top performer in the broader market (XLK: +5.5%), while telecommunications (XLC: -2.68%) and consumer staples (XLP: -2.16%) lagged behind.

The performance of Treasury bonds was mixed and moderate. The price of WTI crude oil fell 1% after a sharp spike during the previous session.

The core PCE index rose by 0.1% month-over-month in June—the smallest increase since March 2025—compared to a consensus estimate of 0.2%. The annual rate rose by 3.3%, in line with expectations, marking the slowest pace since March 2026. The number of initial claims for unemployment benefits fell to 200,000, compared with a consensus estimate of 206,000, and the number of continuing claims also came in below forecasts. Preliminary estimates show that U.S. GDP grew by only 1.5% in the second quarter, compared with an average forecast of 2.1%. Government spending, business investment, and exports acted as drag factors.

— MarketAxess Holdings (MKTX: +29.5%) will be acquired by Intercontinental Exchange for approximately $6 billion in cash. The transaction, which is expected to close in the first half of 2027, values the company at $167 per share. This represents a premium of about 33% over the closing price on July 29.

— Corcept Therapeutics (CORT: +27.3%) reported strong second-quarter results and raised its revenue forecast for 2026. This growth was driven by the rapid launch of Lifyorli, as well as increased sales of Korlym and its authorized generic. The company reported that the resubmitted application for approval of the anticancer drug relacorilant, filed in June, is currently under review by the FDA.

— FormFactor (FORM: +26.3%) reported second-quarter revenue and EPS above market averages, and its own guidance for the next comparable period exceeded the consensus. Demand is being driven by a recovery in orders from TSMC (TSM), activity at Intel (INTC), and the rollout of programs related to XPUs and GPUs. Additional positive factors included demand for co-packaged optics solutions and improved margins.

— EMCOR Group’s (EME: +19.3%) second-quarter revenue and earnings per share significantly exceeded average market expectations. The company’s U.S. electrical and mechanical segments posted the strongest performance. Margins improved, and the backlog reached a record high. The company significantly raised its full-year guidance, indicating management’s confidence that strong momentum will continue in the second half of the year.

— Lam Research (LRCX: +18%) exceeded expectations for revenue and earnings per share in the fourth quarter of its fiscal year. Business margins improved compared to the previous quarter, and capital expenditures came in lower than forecast. Guidance for the current quarter exceeded the market consensus. Management expects steady revenue from the services segment and remains positive about demand for equipment for advanced chip packaging technologies, including solutions for high-bandwidth memory (HBM) and contract manufacturing of various chips.

— Oracle (ORCL: +8.3%) is expanding its partnership with Google Cloud. The companies plan to integrate Gemini models into Oracle AI Agent Studio for Fusion Applications, as well as other Fusion Cloud and Oracle NetSuite applications. This will allow Oracle to strengthen its position in enterprise AI solutions and enhance the value of its cloud ecosystem.

This article was AI-translated and verified by a human editor