Microsoft announced fiscal fourth-quarter results on July 29 showing a 43% rise in Azure cloud revenue, beating the roughly 40% analyst estimate, and forecasted sales and cloud growth above expectations for fiscal Q1 2027. The company also expects to continue generating cash throughout fiscal 2027 [1, 2]. CEO Satya Nadella said the company moved from relying on OpenAI to designing its own AI models and chips with up to 40% efficiency gains. "That's really the enterprise design architecture that we are going to evangelise. We ourselves are using it," Nadella said [1].
Microsoft's shares rose more than 15% on the earnings announcement, the largest single-day gain in about 18 years, adding near $450 billion to market value [2, 3]. Portfolio manager Jed Ellerbroek called Microsoft a "trusted AI winner," noting strong delivery on results and outlook [2].
Amazon also reported strong second-quarter results on July 31, with AWS revenue growing 37%—its fastest pace since late 2021—and raised its 2026 capital expenditure forecast to $220 billion, emphasizing large AI infrastructure investments. CEO Andy Jassy said, "We're unusually well-positioned for this AI inflection." Amazon's shares gained over 15% on the report despite negative free cash flow of $7.6 billion over the past year due to heavy investment [4, 5, 6]. Jake Dollarhide, CEO of Longbow Asset Management, said Jassy's comments "put fears to bed" about reckless spending [6].
Meta Platforms' shares fell 8-9% after a 91% drop in Q2 free cash flow tied to AI spending pressures [7, 2]. Apple's shares declined 1.4-7.4% following mixed results and supply-chain constraints despite holding the title of most valuable company [7, 2, 5].
Wall Street responded positively to Microsoft's report on July 30, with major technology and semiconductor stocks surging. The PHLX semiconductor index rose between 6.7% and 8.2% over July 29-30 [7, 2, 3]. The South Korean Kospi index rebounded 18% on July 31, lifted by chipmakers SK Hynix and Samsung Electronics after prior volatile declines related to AI market uncertainty. CEO Jung In Yun called the rebound a "relief rally supported by improving fundamentals" rather than just bargain hunting [8].
Analysts remain alert to AI spending across tech companies. Anna Rathbun, CEO of Grenadilla Advisory, said, "The concern is no longer just how much these companies are spending — it's that higher rates may not deter them from spending more, because they see the AI buildout as a competitive necessity" [7].
Microsoft’s strong cloud revenue and outlook have helped it sustain its No. 2 position behind Amazon in the cloud market despite fierce competition [1]. Next, investors will watch Microsoft's fiscal Q1 2027 performance and the continued effects of AI investments on tech earnings in the coming quarters.
