Microsoft shares surged 15.51% on Thursday, marking their best single-day performance in 18 years and the strongest post-earnings rally in the company's history, with trading volume reaching $49.116 billion. The tech giant finally convinced Wall Street it has found the right balance in artificial intelligence investments, translating into historic stock gains. After facing criticism over AI spending, particularly amid constrained cloud growth, Microsoft's latest quarterly report showed accelerated cloud performance, drawing investor favor. Management also assured that heavy AI investments this fiscal year won't push the company into negative free cash flow territory.
D.A. Davidson analyst Gil Luria noted that Microsoft's "very strong" earnings "should not only change the narrative for Microsoft, but also signal that AI construction is in responsible hands." Evercore ISI analyst Kirk Materne described the "magnitude of the beat" in Azure's accelerated growth as "even exceeding the most optimistic expectations," specifically highlighting Azure's 43% growth rate in the fourth fiscal quarter and the company's target of 45% growth on a constant currency basis in the September quarter.
Micron Technology led the day's trading volume at $51.158 billion, closing up 18.32%. The rally in chip stocks, including SanDisk (up 25.99% with $28.635 billion in volume), was driven by Microsoft's responsible AI spending stance. D.A. Davidson's Gil Luria identified Microsoft's "responsible approach" to capital expenditure as the catalyst for Thursday's chip sector gains. Wedbush analyst Matt Bryson said Microsoft's AI-driven cloud revenue improvement "doesn't align with the narrative that AI spending is crushing growth and cash flow unsustainably." Gabelli analyst Hendi Susanto also credited Microsoft's earnings for reviving chip stocks. Zacks Investment Research strategist Andrew Rocco suggested that the market may be bottoming as excessive leverage unwinds, combining with value buying.
Meta Platforms dropped 7.95% on $22.374 billion in volume as analysts flagged accelerating AI investment without clear proof of monetization beyond advertising. The stock fell as much as 9.7% in early trading, with Evercore ISI's Mark Mahaney citing "lack of forward guidance" on 2027 spending as a drag. Meta raised its 2026 capital expenditure forecast to $130-145 billion, up from a prior low end of $125 billion. CFO Susan Li said the company faces "demand-constrained" conditions in the foreseeable future, adding, "We have many areas with positive return on investment where we would invest if we had compute capacity."
Amazon rose 3.90% on $22.003 billion in volume, with its second-quarter earnings and cloud growth beating expectations, sending shares up over 9% in after-hours trading. AWS revenue surged 37% year-over-year, exceeding Wall Street's 31% growth estimate. CEO Andy Jassy called it the highest growth rate for the segment in 18 quarters, noting AWS is "thriving" with AI and custom chip businesses each reaching $25 billion in annualized revenue. Amazon's self-developed chip lines, including Trainium for AI training and Graviton for general processing, were highlighted as new growth pillars, alongside AI products like the Bedrock model marketplace for enterprise clients. The company guided third-quarter revenue between $197-202 billion, below the $204.1 billion analyst consensus.
Advanced Micro Devices (AMD) gained 13% on $17.495 billion in volume after announcing the AMD Instinct MI400 series GPU for frontier AI and high-performance computing. Intel rose 11.3% on $12.393 billion in volume, part of the broader storage and chip sector rally. Tesla added 3.53% on $11.467 billion in volume, with reports that its global vehicle production surpassed 10 million units.
Nebius Group (NBIS) jumped 27.13% on $7.731 billion in volume, also boosted by Microsoft's earnings. Microsoft's fourth-quarter Azure and other cloud services revenue grew 43% year-over-year (constant currency), accelerating from 40% in the prior quarter and exceeding the 39.6-40% analyst estimate. Full-year Azure revenue surpassed $100 billion for the first time, making it the second cloud service to reach this milestone after Amazon Web Services. SK Hynix rose 17.52% on $7.22 billion in volume as chip and semiconductor stocks rallied across the board. Bloom Energy (BE) climbed 26.49% on $6.99 billion in volume, rebounding after short seller Hunterbrook released a report questioning its supply chain and capacity, particularly its dependence on scandium. Bloom Energy countered, emphasizing supply chain diversification and calling the allegations "false and misleading." Taiwan Semiconductor Manufacturing Company (TSMC) gained 7.64% on $6.897 billion in volume amid reports it is developing an advanced chip packaging technology similar to Intel's, internally called "EMIB-like," to address competitive pressure.
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