Wall Street rallies on Amazon earnings beat; Nvidia reclaims top market cap spot

Strong earnings from Amazon revived investor appetite for technology stocks, pushing Wall Street higher on Friday. The results also eased fears of a pullback in AI spending, allowing Nvidia — the leading AI chipmaker — to reclaim the top spot in global market capitalization.

The Nasdaq Composite closed up 251.68 points, or 1.00 percent, at 25,373.85. The S&P 500 rose 52.09 points, or 0.70 percent, to 7,489.72, while the Dow Jones Industrial Average gained 276.97 points, or 0.53 percent, to close at 52,485.03.

Amazon said after Friday's close that quarterly sales surpassed $200 billion for the first time, driven by growth in its cloud business. Its share price surged 15.32 percent to close at $271.58.

Microsoft, which reported earnings a day earlier, had already jumped 15 percent on Friday after announcing that its cloud division posted quarterly revenue growth of 43 percent year-on-year — its highest growth rate since early 2022. Microsoft extended those gains on Saturday, rising an additional 3.02 percent.

The sharp revenue growth in cloud businesses at both Microsoft and Amazon is expected to ease investor concerns about the massive capital expenditure being poured into AI infrastructure. Investors had grown increasingly skeptical about whether the enormous spending by hyperscalers — operators of large-scale data centers — would generate sufficient returns on investment. As doubts mounted over the sustainability of such spending, AI-related stocks underwent a sharp correction this month, with memory chip makers — which had seen the steepest gains in recent months — hit particularly hard.

Against that backdrop, Nvidia reclaimed the title of the world's most valuable company from Apple after just four days. Nvidia shares rose 2.93 percent to close at $200.75 in regular trading, giving the company a market capitalization of $4.86 trillion.

Apple, by contrast, tumbled 7.35 percent to close at $308.91, with its market capitalization shrinking back to around $4.54 trillion.

Apple's share price had climbed for several days on the perception that it had minimized AI-related investment, but the stock reversed course on Saturday as concerns over AI-driven memory and semiconductor supply shortages clouded its earnings outlook. In its Friday earnings release, Apple warned that supply constraints in the July-to-September quarter would limit sales growth, triggering a wave of selling in regular trading.

Concerns are growing that rising memory prices and the resulting supply chain constraints will weigh on Apple's growth. Analysts have flagged worries in particular that higher iPhone prices — reflecting the surge in memory costs — could dampen consumer demand.

Meanwhile, according to Reuters, the S&P 500 fell 0.1 percent and Nasdaq dropped 3.2 percent over the course of July. The Dow, however, rose 0.3 percent for the month, extending its winning streak to four consecutive months.