Amazon Surges 15.3% on Blowout Earnings, JPMorgan Upgrade; Apple Falls on Supply Warning

U.S. stocks rose Friday, closing a turbulent July with a winning session, as Amazon.com Inc. surged on a blockbuster earnings report and a key analyst upgrade, while Apple Inc. slumped on a disappointing forecast.

The S&P 500 gained 0.7% to 7,489.72. The Dow Jones Industrial Average added 276 points, or 0.5%, to 52,485.03. The Nasdaq Composite rallied 1% to 25,373.85, after briefly losing all of an early 1.3% jump.

Amazon led the market with a 15.3% leap, according to reports from multiple outlets. The e-commerce and cloud giant reported that its profit more than tripled from a year earlier, fueled by an acceleration of growth in its cloud computing business. Analysts said the results signaled that Amazon’s heavy investments in artificial intelligence are paying off. The company also increased its forecast for capital spending this year.

The rally was amplified by a price-target upgrade from JPMorgan, which raised its target on Amazon to $365 from $330, according to NDTV Profit. The brokerage said Amazon’s expanding margins, accelerating AI monetization and resilient cash flows could drive the stock to fresh record highs. JPMorgan highlighted Amazon’s proprietary AI chips and its partnership with Anthropic as catalysts for enterprise AI adoption on its AWS cloud platform.

The surge mirrored a similar move in Microsoft Corp. a day earlier, when its stock posted its best day in nearly 18 years on signals that its AI investments are also yielding higher profits.

On the losing end of Wall Street was Apple, which dropped 7.4% — its worst one-day selloff since March 2020, according to the New York Post. The decline came despite Apple reporting stronger-than-expected profit for the fiscal third quarter. The company’s forecast for revenue growth of 9% to 11% in the current quarter fell short of Wall Street expectations of roughly 12%, according to the New York Post. Apple executives pinned the shortfall on supply constraints, with CEO Tim Cook describing a “100-year flood” in memory-chip pricing that is squeezing profit margins, the New York Post reported.

The divergent tech results marked a crucial test for the sector. Market participants had viewed the week as a barometer for whether big AI investments are translating into returns. Before Friday, AI-linked stocks came under pressure in July as investors locked in profits and sought evidence of meaningful payback.

The gains on Wall Street came despite another rise in oil prices. Brent crude rose 1.2% to settle at $87.93 a barrel, after careening between $72 and $102 earlier in July. Higher oil prices, driven by the ongoing war with Iran, have pushed U.S. gasoline prices to an average of nearly $4.11 a gallon, up from $3.85 a month ago, according to AAA.

The energy price pressures have worsened inflation worries, sending bond yields higher. The yield on the 10-year Treasury rose to 4.71% from 4.68% late Thursday, and from 3.97% before the war with Iran began. The move has pushed the average long-term U.S. mortgage rate to its highest level in a year.

The Federal Reserve voted Wednesday to keep its benchmark interest rate steady, even though inflation remains well above its 2% target. Fed Chair Kevin Warsh promised again to bring inflation down but refused to detail how. That has sparked a debate over whether the Fed will need to hike rates in September. According to CME’s FedWatch tool, traders raised the probability of rates remaining unchanged in September to 35%, compared with about 18% a week earlier.

Chip stocks remained volatile. Micron Technology swung from a 6.4% early gain to a 6.5% loss before closing down 5.9%. In overseas markets, Seoul’s Kospi index soared 17.9% — its best day in history — as Samsung Electronics and SK Hynix both surged at least 26.8%. The Kospi still lost 22% in July despite Friday’s historic move, following a doubling in the first six months of the year.

The S&P 500 managed its first winning week in three, but the index still finished July with a tiny loss. The Nasdaq and S&P 500 both remained on track for a negative month after the steep selloff in AI-related stocks earlier in July.