BY COMFORT OGBONNA
Wall Street’s major indexes moved higher on Friday as investors welcomed a strong earnings report from Amazon, easing concerns about the massive investments technology companies are making in artificial intelligence. Gains in several large technology stocks helped lift the broader market, although a sharp decline in Apple limited advances in the technology sector.
Amazon shares surged 15% after the company reported its fastest quarterly revenue growth in more than four years, signaling continued strength in its cloud computing and e-commerce businesses. The results reinforced investor confidence that heavy spending on artificial intelligence infrastructure is beginning to generate meaningful returns.
The company’s performance followed another upbeat earnings report from Microsoft earlier in the week, adding to optimism that leading technology firms remain well-positioned to benefit from the rapid expansion of AI services.
For much of July, investors had questioned whether the billions of dollars being invested in AI data centers and computing infrastructure would produce profits quickly enough to justify the enormous costs. Those concerns had weighed heavily on technology stocks, which have been among Wall Street’s strongest performers over the past several years.
Amazon’s latest financial results helped ease those fears by demonstrating that continued investment in artificial intelligence can coexist with strong revenue growth and improving business performance.
The semiconductor sector also benefited from renewed confidence in AI spending. The Philadelphia Semiconductor Index gained about 1.3% during Friday’s session, although it remains more than 20% below the record closing high reached in June, reflecting the volatility that has affected chipmakers in recent weeks.
While Amazon and several AI-related companies rallied, Apple suffered a sharp decline after issuing a cautious outlook. Shares of the iPhone maker fell nearly 10% after the company warned that supply constraints could slow future growth. Investors also expressed concern that recent price increases for iPhones and other products could weaken consumer demand in an uncertain economic environment.
Apple’s decline weighed on the broader technology sector, leaving the S&P 500 technology index lower despite gains among several other major technology companies.
Microsoft extended its recent rally with an additional gain of more than 2%. The software giant had posted one of its strongest single-day performances in years after forecasting stronger-than-expected growth in its cloud computing business, reinforcing expectations that demand for AI-powered services remains robust.
Chipmaker Monolithic Power Systems also posted strong gains after projecting third-quarter revenue above analysts’ expectations, adding to positive sentiment across portions of the semiconductor industry.
By Friday afternoon, the S&P 500 had climbed roughly 0.6%, while the Nasdaq Composite gained about 0.8%. The Dow Jones Industrial Average also moved higher, reflecting broad-based strength across several sectors of the market.
Despite the gains in the major indexes, market breadth remained mixed, with declining stocks slightly outnumbering advancing stocks on the S&P 500, indicating that much of the market’s strength continued to be driven by large-cap companies.
Meanwhile, SpaceX shares declined about 3%, putting the stock on track for its lowest closing level since its highly anticipated initial public offering earlier this year. The decline reflected continued volatility among newly listed growth companies as investors reassessed valuations following recent market swings.
Corporate earnings continue to play a central role in shaping market sentiment. Analysts expect aggregate second-quarter earnings for companies in the S&P 500 to rise sharply from a year earlier, with AI-related businesses contributing a significant share of that growth.
Recent declines in stock prices, combined with improving earnings expectations, have also made market valuations appear more reasonable. The S&P 500 is currently trading at roughly 20 times expected earnings, only modestly above its long-term average, suggesting that valuations remain elevated but are no longer as stretched as earlier in the year.
Although the S&P 500 has remained relatively unchanged during July and the Nasdaq has experienced a modest monthly decline, both indexes continue to post solid gains for 2026, reflecting the resilience of the U.S. stock market despite periods of heightened volatility.
The equal-weight version of the S&P 500, which gives each company the same influence regardless of size, remained on track for a fourth consecutive month of gains. Its stronger performance compared with the traditional index reflects its lower exposure to the largest AI-focused technology companies, many of which have experienced increased volatility in recent months.
Investors also continued monitoring monetary policy after several Federal Reserve officials argued that inflation remains above the central bank’s target and supported additional interest rate increases to bring price growth under control.
The yield on the two-year U.S. Treasury note, which is particularly sensitive to expectations for Federal Reserve policy, moved higher during the session. Financial markets continue to anticipate the possibility of another interest rate increase at the Fed’s September meeting, although expectations have eased somewhat compared with the previous week.
Elsewhere, shares of domain registration and web services company GoDaddy tumbled after the company lowered its annual revenue outlook, raising concerns about slower growth in its business.
Trading activity reflected a mixed market environment, with several stocks reaching new annual highs while a larger number of companies recorded fresh lows on the Nasdaq, underscoring continued investor selectivity.
Market participants now turn their attention to upcoming economic data, additional corporate earnings reports, and future signals from the Federal Reserve as they assess whether the recent rally in AI-related stocks can continue through the second half of the year. Strong earnings from major technology companies have helped restore confidence, but investors remain cautious as they balance growth opportunities against concerns over inflation, interest rates, and global economic uncertainty.
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