Microsoft and Amazon Shares Soar After Earnings, Adding $1.3 Trillion in Market Value
Microsoft and Amazon reported strong earnings, triggering sharp rallies. Microsoft shares jumped 16% on July 30 after its July 29 report, and Amazon rose 15% following its July 30 release. Over six trading days from July 29, Microsoft gained 28% and Amazon 20%, adding a combined $1.3 trillion in market value. Azure revenue grew 43% year-on-year in the fiscal fourth quarter, the fastest since early 2022; AWS revenue rose 37% in the second quarter, accelerating for a fifth straight quarter. Microsoft's year-to-date decline of 19% before earnings turned to a 3.4% gain, while Amazon is up 18%.
Microsoft reported earnings after the US market close on July 29, and its shares surged 16% the next day. Amazon released results on July 30, and its stock rose 15% on the following trading day. Over the six trading days since July 29, Microsoft shares gained 28% cumulatively, and Amazon shares gained 20%, adding a combined $1.3 trillion to the two companies' market value. Prior to the report, Microsoft's year-to-date decline was 19%; after earnings, its annual gain turned positive to 3.4%. Amazon's year-to-date gain reached 18%.
Microsoft's fiscal fourth-quarter Azure cloud revenue grew 43% year over year, the fastest pace since early 2022. Amazon's AWS cloud business posted 37% year-over-year revenue growth in the second quarter, accelerating for a fifth consecutive quarter.
After Alphabet reported earnings two weeks ago, its shares fell 7.1% the next day, then rebounded to a high since June. This week, shares weakened again following the departure of several key AI employees, but the stock remains up more than 14% year to date.
The Nasdaq 100 index fell 11% from its June high to July 29, then rose for four consecutive days. After the rebound, the Nasdaq 100's price-to-earnings ratio is around 22 times. Goldman Sachs data shows that investors' overall positioning in the seven major technology giants is relatively low.
On the macro front, Iran announced it has reached an agreement in principle with Oman to reopen the Strait of Hormuz, but US and Israeli vessels are not included in the passage scope. Oil prices rebounded in response.