Shares of Cloud Giants Soared: Microsoft and Amazon Reassured Investors
Even Meta ended up in the black, despite the market reacting negatively to its earnings report
Shares of the largest cloud infrastructure providers surged during trading on Monday, August 3.
Microsoft and Amazon shares rose as much as 5.7% during the day, with Amazon’s stock hitting a new record high and the company’s market capitalization surpassing $3 trillion for the first time. Shares of Meta, which owns Instagram and Facebook, jumped 7.3%. It recouped all the losses it suffered following the release of its earnings report last week, Yahoo Finance noted. Alphabet (Google’s parent company) rose 5.1%. Oracle climbed 8.5%.
All major U.S. stock indices rose sharply during Monday's trading session. The broad-market S&P 500 index gained about 1.5%, the blue-chip Dow Jones Industrial Average rose 1.3%, and the tech-heavy Nasdaq Composite climbed 2.2%. The S&P 500 rose above 7,600 points for the first time since early June. The S&P 500 and the Dow Jones are approaching record highs, Barron’s notes.
What's the matter?
Yahoo Finance attributes the rally to investor optimism, which was fueled by Amazon and Microsoft’s earnings reports in late July. Specifically, Microsoft reported record revenue from its cloud business, which grew by 43% last quarter—the fastest pace since 2022. Meanwhile, Amazon Web Services (AWS) posted its fastest sales growth in 18 quarters. The companies’ results and forecasts gave the cloud giants’ sector a breather after their stocks came under pressure from questions about massive investments in artificial intelligence and the time it would take for those investments to pay off, Yahoo Finance reports.
The business potential in the AI sector for Amazon is “simply enormous,” AWS CEO Matt Garman said Monday on Bloomberg TV. According to him, AWS customers are beginning to shift from using the company’s services to training AI models in order to integrate them into their businesses, which is increasing demand for inference—the process by which artificial intelligence generates responses to user queries. Amazon is the largest provider of computing power and data-related services, Bloomberg noted.
The market as a whole is benefiting not only from the rally in IT giants but also from the drop in oil prices after U.S. President Donald Trump announced a new round of negotiations with Iran, according to CNBC.
How sustainable is this optimism?
The forces that drove the U.S. market to record highs this year remain “unchanged” following a resurgence in speculative trading by retail investors, said Scott Rubner, head of equity and derivatives strategy at Citadel Securities, according to a note cited by Bloomberg.
According to Citadel, retail investors’ stock sales reached their highest level since 2022 during the last week of July, with the sell-off concentrated in tech stocks, Rubner says. Investors shed “excess holdings,” and a string of strong earnings reports was a positive sign for U.S. stocks: companies were able to exceed even inflated expectations, says the Citadel strategist. “For the first time in several months, we believe investors may focus less on positioning and more on fundamentals,” he added.
This article was AI-translated and verified by a human editor
