Nasdaq futures outpaced other U.S. contracts on Friday after Amazon’s stock surged, driven by robust cloud revenue that helped soothe investor concerns over returns from heavy artificial intelligence spending. Amazon’s shares jumped 12% on the news, a move that supported gains in the Nasdaq 100 despite a notable pullback in Apple’s stock after the iPhone maker warned that supply constraints would impede growth; Apple sank 7.3% in premarket trading.
Market participants described the week as a moment of truth for the technology sector, which had been under pressure through July after investors took profits following a strong close to the second quarter. The focus was on whether the large-scale investments made by AI leaders - investments that have weighed on free cash flow - are beginning to show tangible revenue benefits.
Amazon reported its largest revenue increase in more than four years for the most recent quarter on Thursday, echoing earlier strong results from Microsoft and Alphabet that were released earlier in the month. Those top-line gains prompted some investors to look beyond the sharp declines in cash flows the companies also reported for the quarter.
John Plassard, head of investment strategy at Cité Gestion, emphasized the shifting investor bar. "It is no longer enough to beat overall estimates; companies must also reassure investors about the drivers of future growth," he said. "Ultimately, Amazon confirms that the momentum in artificial intelligence continues to support the hyperscalers, while Apple reminds us that its main challenge now remains accelerating its AI strategy while sustainably reviving its growth in China."
Market-data snapshots published during the session showed a mix of moves across major names and indexes: NDX was up 3.36% while the US500 rose 1.66% and the DJI gained 1.19%. Several individual stock moves were notable in intraday trading: MSFT had recorded an outsized one-day gain in the previous session but dipped 0.8% on Friday; Alphabet added 2.3%; Meta climbed 2%; and Tesla rose 1.6%. Among chipmakers, Nvidia advanced 1.5% and Micron jumped 3.5%.
There were also intraday derivative readings: at 5:37 a.m. ET Dow E-minis were higher by 259 points, or 0.49%, S&P 500 E-minis were up 34.5 points, or 0.46%, and Nasdaq 100 E-minis were up 316 points, or 1.12%.
Despite the rebound late in the week, all three of Wall Street’s major indexes remained on track to post monthly losses, reflecting the steep selloff that AI-linked stocks experienced across July. The Philadelphia Semiconductor index was still down by more than 20% for the month, a drop the article noted would make it the index’s largest monthly decline since the housing bubble era in late 2008.
With mega-cap tech names under scrutiny, investors paid attention to other corners of the market: the S&P 500 equally weighted index was set to record its fourth consecutive month of gains, signaling that breadth had improved even as headline tech names oscillated.
Laurent Clavel, global head of multi-asset at AXA Investment Managers at BNP Paribas Asset Management, described the recent movement as a cleansing of positions. "This momentum crash was tremendous and the positioning has been rinsed," he said. "Going into August, if anything, we are going back into it slowly. We’re buying this weakness and we’re re-buying this AI narrative."
The week also injected fresh uncertainty into rate expectations after the Federal Reserve left interest rates unchanged. Commentary from Chairman Kevin Warsh and a generally benign inflation report on Thursday contributed to shifting market odds: investors were pricing in a 36.8% chance that interest rates would remain unchanged in September, up from roughly 20% the prior week.
Economic releases to watch included the University of Michigan’s July consumer sentiment survey, scheduled for release at 10 a.m. ET. In corporate news, GoDaddy shares lost 12.4% after the domain registrar narrowed its annual revenue forecast.
Market snapshot and notable movers
- Amazon: shares jumped 12% after strong cloud revenue results.
- Apple: warned of supply constraints and saw a 7.3% premarket decline.
- Microsoft: fell 0.8% after a prior session that included a record one-day gain.
- Alphabet: gained 2.3%; Meta: +2%; Tesla: +1.6%.
- Nvidia: +1.5%; Micron: +3.5%; Philadelphia Semiconductor index: still down over 20% for July.