Microsoft and Amazon Earnings: Cloud Growth Dispels AI Profitability Concerns
Microsoft and Amazon sparked a US stock market rally with strong cloud earnings, easing market concerns over AI infrastructure investments.
Proving AI Fundamentals: Big Tech Earnings Calm the Market
A key risk weighing on the US stock market recently has been skepticism surrounding 'overinvestment in AI'. However, the earnings reports released by Microsoft and Amazon at the end of July 2026 demonstrated with hard numbers that massive AI infrastructure capital expenditures (CAPEX) are translating directly into cloud profitability, driving a rebound in the Nasdaq.
Microsoft: Explosive Growth in Azure
Reporting earnings on July 29 (local time), Microsoft far exceeded market expectations in its cloud computing segment.
- Quarterly Revenue: $90.07 billion (18% year-over-year growth)
- Azure and Other Cloud Services: Revenue surged 43% (beating market expectations of 40%)
- Stock Reaction: Shares jumped approximately 15-16% on July 30, with market capitalization increasing by $450 billion to $650 billion in a single day.
Notably, the daily increase in market capitalization marked one of the largest in US stock market history. This reflects rebuilt market confidence that infrastructure investments for running AI models are leading to solid customer demand.
Amazon: Breaking the $200 Billion Quarterly Revenue Mark for the First Time
Amazon's Q2 earnings, announced on July 30 (local time), also delivered results that surpassed market expectations.
- Quarterly Revenue: $200.6 billion (20% year-over-year growth)
- AWS (Cloud) Revenue: $42.2 billion (37% year-over-year growth)
- Adjusted EPS: $5.75 (significantly beating market expectations of around $1.81)
Amazon's stock also saw a strong 10-14% rally during regular trading on July 31. Management highlighted long-term cloud capacity reservations, making it clear that large-scale investments will lead to solid profitability.
Market Outlook and Implications
These US Big Tech earnings confirmed that the AI rally is based on actual cash generation rather than mere speculation. The strong performance from Microsoft and Amazon triggered a sharp rebound in the Nasdaq, which had been on a six-day losing streak, leading to a broader buying trend across the entire AI value chain, including semiconductors. Investors are once again focusing on the structural profit growth potential of cloud infrastructure providers rather than short-term valuation pressures.