The S&P 500 index rose 1.1% last week as hyperscalers showed the mega spend on the artificial intelligence buildout is being monetized. The index is now down 0.1% quarter-to-date but up 9.4% year-to-date.
Microsoft (MSFT) and Amazon.com (AMZN) rose as quarterly results from the tech giants showed revenue growth in areas related to AI products and services, helping calm worries surrounding hundreds of billions of dollars of investments earmarked for the AI buildout.
Microsoft reported triple-digit AI annual recurring revenue growth and an accelerating Azure trajectory into the end of 2026, Dan Ives, global head of technology at Wedbush Securities, said in a note to clients. The software behemoth’s quarterly results, which included Azure’s full-year revenue surpassing $100 billion for the first time, reinforced the idea that “any knee-jerk reactions to the elevated capex framework represent strong buying opportunities,” Ives said.
Shares of Microsoft were up 22% on the week.
The consumer discretionary sector in the S&P 500 had the largest percentage gain, up 8.3%, followed by a 5.4% advance in communication services and a 1.2% rise in consumer staples.
Sales at Amazon’s cloud computing unit delivered the fastest growth in 18 quarters, helping the e-commerce giant exceed market expectations for Q2 earnings and revenue. Shares jumped 17% last week even as the company expanded its capital expenditure by about $20 billion to $220 billion.
The three worst-performing S&P 500 sectors were utilities, real estate and materials, down 4.2%, 2.2%, and 1.7%, respectively.
This week, quarterly earnings are expected from Palantir Technologies (PLTR), Space Exploration Technologies (SPCX), Advanced Micro Devices (AMD), Walt Disney (DIS), and Uber Technologies (UBER), among others.
Economic data due this week includes non-farm payrolls, job openings and labor turnover survey, and ISM manufacturing and services purchasing managers’ indexes.
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