Amazon Surges 14%, Lifts Tech Stocks as AWS Growth Eases Investor Nerves

Amazon.com Inc. shares surged about 14% in early trading Friday, driving a broad technology-stock rally that pushed the Nasdaq Composite higher as investors welcomed the company’s strongest quarterly revenue growth in more than four years and a rebound in its cloud business.

At the opening bell, Amazon’s stock jumped to $269.46, and by 9:47 a.m. ET the Nasdaq Composite had risen 0.34% to 25,208.37, the S&P 500 gained 0.12% to 7,446.54, and the Dow Jones Industrial Average added 0.16% to 52,290.32, according to a Reuters report. The S&P 500 consumer discretionary sector led the market, climbing 5.2% on Amazon’s gains.

The rally came after Amazon on Thursday reported its strongest quarterly revenue growth in more than four years. Amazon Web Services (AWS), the company’s cloud computing arm, posted its fastest quarterly cloud-unit growth since 2021, reinforcing the belief that sky-high capital expenditure on artificial intelligence will generate returns.

AWS’s AI business and chips attracted over $25 billion in annualized revenue, surging more than double compared with a year ago, according to NDTV Profit.

“Amazon showed us, without a shadow of a doubt, that the web-services or AI side of the business is driving growth for the company,” Adam Sarhan, chief executive of 50 Park Investments in New York, told Reuters. “Investors are able to look past the free-cash-flow decline because it is one component. If growth continues, it will make up for that shortfall.”

JPMorgan raises target price on AI optimism

JPMorgan assigned a “buy” rating to Amazon and lifted its price target to $365 from $330, implying nearly 40% upside from current levels. The Wall Street brokerage said expanding margins, accelerating AI monetization, and resilient cash flows could drive the stock to fresh record highs, as reported by NDTV Profit.

JPMorgan analysts said Amazon’s strong operating cash flow gives it financial flexibility to continue investing in AI infrastructure and data centers without straining its balance sheet. They also highlighted Amazon’s proprietary AI chips, including Trainium 2 and Inferentia, and a strategic partnership with Anthropic as catalysts for higher enterprise AI adoption on AWS.

Broader tech rally, but Apple caps gains

Other Big Tech names also advanced. Microsoft shares rose 1.8% after recording their biggest single-day gain on record in the previous session. Alphabet and Meta each climbed more than 2%. Among semiconductor stocks, Nvidia gained 1.3% and Micron added 1.6%.

However, the broader market’s advance was tempered by Apple, whose shares fell 9.8% in early trade after the company cautioned that supply constraints would weigh on growth.

Market participants had viewed this week as a crucial test for the technology sector. After a strong finish to the second quarter, AI-linked stocks came under pressure in July as investors locked in profits and sought evidence that substantial AI investments were translating into returns. Amazon’s results encouraged investors to focus on accelerating growth rather than the sharp decline in free cash flow reported alongside earnings.

Rate outlook adds uncertainty

The week also introduced fresh uncertainty over the interest-rate outlook after the Federal Reserve kept its benchmark rate unchanged. Comments from Chair Kevin Warsh, along with a broadly benign inflation report released on Thursday, prompted traders to raise the probability of rates remaining unchanged in September to 35%, compared with about 18% a week earlier, according to CME’s FedWatch tool.

Despite the late-week rebound putting all three major Wall Street indexes on course for weekly gains, the S&P 500 and Nasdaq remained on track to end July in negative territory after AI-related stocks experienced a steep selloff during the month.