Amazon.com (NASDAQ: AMZN) soared more than 14% on Friday, leading megacap technology stocks higher and lifting major U.S. indices to their best levels in a week.
The S&P 500 Index closed up +0.70%, the Dow Jones Industrial Average gained +0.53%, and the Nasdaq 100 Index finished higher by +0.60%.
Amazon Web Services reported net sales of $42.23 billion, comfortably beating the consensus estimate of $40.57 billion and marking the fastest quarterly revenue growth in five years.
The strong cloud results reassured investors that Amazon’s planned increase in capital spending would generate sufficient returns, and that the global AI infrastructure buildout remains on solid footing.
Alphabet (NASDAQ: GOOGL) closed up more than 6%, while Microsoft (NASDAQ: MSFT), Meta Platforms (NASDAQ: META), and Nvidia (NASDAQ: NVDA) each gained more than 3%, further supporting the broader rally.
Apple (NASDAQ: AAPL) was a notable drag, tumbling more than 9% after reporting Q3 service revenue of $30.74 billion, below the consensus of $31.36 billion, and Greater China revenue of $18.82 billion, missing the $19.58 billion estimate.
Stocks pushed higher despite hawkish commentary from Dallas Fed President Lorie Logan, who said “without any policy restraint, inflation will likely continue to trend above target until there’s an unanticipated shock.”
Logan added that “modest action in the near term would reduce the likelihood of needing to take sharper action later,” sending the 10-year T-note yield surging to a 1.5-year high of 4.745%.
U.S. economic data released Friday came in stronger than expected, with the Q2 employment cost index rising +0.9%, the July MNI Chicago PMI climbing to 57.6, and the University of Michigan consumer sentiment index revised upward to a five-month high of 55.2.
China’s July manufacturing PMI fell 1.1 points to 49.2, a five-month low and well below the 50.1 consensus, while the non-manufacturing PMI slumped to 49.0, its weakest level in three and a half years.
Cryptocurrency-related stocks faced heavy selling pressure as Bitcoin fell more than 2% to a 2.5-week low, with Coinbase Global (NASDAQ: COIN) dropping more than 10% after reporting Q2 revenue of $1.22 billion, short of the $1.29 billion consensus.
Roblox (NYSE: RBLX) plunged more than 26% after reporting Q2 daily active users of 123 million, well below the consensus expectation of 128.71 million.
Reddit (NYSE: RDDT) fell more than 20% after Q2 U.S. daily active users of 53.2 million came in under the 54 million consensus estimate.
GoDaddy (NYSE: GDDY) led S&P 500 decliners with a drop of more than 16% after Q2 total bookings of $1.42 billion narrowly missed the $1.43 billion consensus.
On the brighter side, Dexcom (NASDAQ: DXCM) gained more than 10% after reporting Q2 revenue of $1.31 billion and raising its full-year revenue forecast to a range of $5.18 billion to $5.25 billion.
Monolithic Power Systems (NASDAQ: MPWR) jumped more than 8% after Q2 revenue of $980.6 million crushed the $903.3 million consensus, with Q3 guidance also coming in well ahead of expectations.
Earnings forecasts compiled by Bloomberg Intelligence indicate Q2 earnings for the S&P 500 may increase by +23%, with AI infrastructure stocks expected to contribute nearly 60% of earnings-per-share growth.
So far, 86% of the 291 S&P 500 companies that have reported Q2 results have beaten estimates, according to Bloomberg data, providing a strong backdrop for continued equity market optimism.
