Nasdaq Surges 1.8% on Microsoft Rally, AI Optimism Returns

Wall Street rebounded sharply Thursday, led by a surge in Microsoft Corp. after the technology giant reported stronger-than-expected quarterly earnings that rekindled investor enthusiasm for artificial intelligence. The rally helped the market recover more than half of the prior session’s steep selloff, which had been triggered by Federal Reserve Chair Kevin Warsh’s comments on inflation.

The tech-heavy Nasdaq Composite climbed 1.8%, a day after slipping nearly 10% below its recent record high, according to the Times of India. The S&P 500 rose 0.9% and the Dow Jones Industrial Average gained 250 points, or 0.5%. At the open, the Nasdaq had surged 1.54% while the S&P 500 opened 1% higher, NDTV Profit reported.

**Microsoft’s AI-Powered Beat**

Microsoft shares surged over 14% in heavy trading, with NDTV Profit reporting a high of $445.73. The company posted quarterly revenue of $90.01 billion, exceeding the consensus estimate of $87.62 billion. Net income rose to $35.77 billion, or $4.81 per share, from $27.23 billion, or $3.65 per share, a year earlier.

The company’s Azure cloud business, a key bellwether for AI demand, grew 43% year-over-year, ahead of market expectations, according to NDTV Profit. Microsoft also recorded a $3.2 billion gain from its investment in AI lab Anthropic and incurred lower-than-expected costs tied to its first voluntary retirement program.

“The performance reflected customers’ increasing adoption of Microsoft’s AI offerings,” Chief Executive Satya Nadella said, as reported by the Times of India.

Investors also welcomed Microsoft’s decision not to significantly raise its AI spending plans, easing concerns that heavy capital outlays could strain cash flows without delivering the expected productivity gains, the Times of India noted.

**Meta Drags While Chips Recover**

On the opposite end of the tech spectrum, Meta Platforms tumbled. The stock fell 8.9% after the social media giant reported quarterly earnings that missed forecasts, despite revenue slightly exceeding expectations, the Times of India reported. NDTV Profit said the stock plunged over 10% to a low of $524.49, adding that Meta’s net cash flow dropped 91% to $784 million due to consistent AI-related investments. Analysts pointed to the company’s decision to raise the lower end of its projected capital spending range for the year as a key concern.

Chipmakers and memory manufacturers recovered some of their recent losses. Micron Technology rose 8.4%, Lam Research jumped 18.3%, and Advanced Micro Devices advanced 7.3%, according to the Times of India. In a separate market summary, Reuters reported that the SOX semiconductor index surged 8%, with Micron up 18% and Sandisk gaining 26%. The tech sector overall climbed 5%, while communications services slid 2.5%.

**Broader Markets and Macro Crosscurrents**

Treasury yields eased slightly Thursday after a sharp rise the previous day. The yield on the benchmark 10-year U.S. Treasury slipped to 4.65% from 4.67%, while the 30-year bond yield held at 5.20% after climbing from 5.09%, the Times of India reported. The earlier surge had followed Fed Chair Warsh’s Wednesday press conference, during which he offered few details on how to bring inflation down. Reuters noted that the selloff in long-dated bonds reflected “a lack of clarity from a central bank about its goals.”

Economic data released Thursday showed the U.S. economy expanded more slowly than expected in the second quarter, while inflation remained above the Fed’s target but came in slightly below market expectations, the Times of India said.

Oil prices eased after recent sharp swings linked to Middle East tensions. Brent crude fell 1.5% to $86.79 a barrel, according to the Times of India. Reuters reported Brent down 2% and WTI down 1%, while NDTV Profit had Brent 1.15% lower at $89.73 and WTI down 0.8% to $83.78.

In currency markets, the yen strengthened sharply against the dollar, with the dollar/yen pair plunging 2.5% — its biggest one-day drop since an April 30 intervention — on suspected action by Japanese authorities, Reuters reported.

The rally in Microsoft shares helped shield broader indices from geopolitical concerns, including the recent flare-up between the U.S. and Iran, NDTV Profit noted. Of the 11 S&P 500 sectors, four traded in the green, led by consumer discretionary, while communications services was the biggest laggard.