[UNITED STATES] U.S. technology stocks recorded a sharp upswing on Thursday, fueled by better-than-expected earnings from Microsoft and Meta Platforms. However, the momentum cooled in after-hours trading, as shares of Apple and Amazon fell, partially offsetting earlier gains.
Tech Sector Rally Fueled by AI Optimism
Technology shares broadly rallied during the session, buoyed by strong financial results and forward-looking commentary from major players. Microsoft climbed 8.7% following its announcement of a 16 percentage point increase in Azure cloud growth tied to artificial intelligence—a jump from 13 points in the previous quarter. Meta Platforms also advanced 4.5%, underscoring how AI has helped sustain its advertising business despite global trade pressures.
The surge in tech equities was also underpinned by renewed market optimism that the Federal Reserve may be nearing the end of its rate-hiking cycle. Earlier in the week, lower-than-anticipated inflation data provided reassurance that tightening measures are beginning to take effect. Analysts note that a pause in rate increases would benefit innovation-heavy sectors like technology, which are especially sensitive to borrowing costs.
AI-focused companies such as Nvidia, AMD, and Broadcom also saw gains, reflecting continued investor belief in the long-term expansion of AI technologies. Amazon rose 2.9% during regular hours, while Apple traded relatively flat after a U.S. court ruled it breached an order related to App Store practices.
Investor sentiment was further lifted by the rapid rollout of generative AI solutions across both consumer and enterprise segments. Microsoft’s Copilot and Meta’s in-platform AI assistants have shown promising early adoption. Market research firm IDC projects global spending on AI-related software, hardware, and services to exceed $300 billion by 2025, pointing to a major growth frontier that investors are eager to capitalize on.
Apple and Amazon's After-Hours Decline
Despite the day’s bullish tone, after-market trading brought losses for both Apple and Amazon. Apple dipped more than 1% following the release of its fiscal second-quarter results, which showed $97.3 billion in revenue and earnings per share of $1.52. Although the figures reflected year-over-year improvement, investor concerns grew over slowing iPhone demand and rising operational costs.
The company’s Services segment, encompassing products like the App Store, iCloud, and Apple Music, reported a record $23.9 billion in revenue, up 8% from the prior year. Still, iPhone revenue—the firm’s largest business line—fell short of Wall Street expectations. CEO Tim Cook attributed the shortfall to “uneven demand” in key international markets, including China, where local competitors have gained market share.
Amazon, meanwhile, tumbled more than 12% after releasing its first-quarter earnings. Net sales rose 7% year-over-year to $116.4 billion, but operating income plummeted to $3.7 billion, down from $8.9 billion a year earlier. The company also reported a $3.8 billion net loss, or $7.56 per share, largely due to a write-down in the value of its investment in Rivian Automotive.
Still, Amazon Web Services (AWS) delivered 17% annual growth, signaling resilience in cloud demand among enterprise clients. However, the company warned of higher capital expenditures moving forward, primarily to support AI infrastructure. CFO Brian Olsavsky noted that while these expenditures are critical for future scalability, they could compress margins in the near term.
Market Outlook
The divergent after-hours performance of Apple and Amazon underscores the challenges many tech firms continue to face, from hardware sales fatigue to escalating costs. Even as AI-driven momentum persists, sustaining investor confidence will require companies to carefully manage growth expectations and capital investments.
With the U.S. jobs report slated for release on Friday, investors will be watching closely for signs of economic cooling or resilience, which could influence both monetary policy and corporate earnings forecasts moving forward.
Analysts caution that volatility is likely to continue through earnings season. While top-tier tech companies have generally exceeded expectations, smaller and mid-cap firms may be more vulnerable to inflationary pressure and currency shifts. Market participants are expected to focus on forward-looking statements and capital allocation plans as indicators of how firms intend to navigate a competitive and uncertain environment.
As of the most recent trading session, Apple Inc. (AAPL) was priced at $213.32, marking a 0.36% increase, with a market capitalization near $3.87 trillion. Amazon.com Inc. (AMZN) traded at $190.20, up 2.93% on the day, giving the company a market valuation of approximately $1.21 trillion.
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