Amazon shares surged in premarket trading after the company reported strong growth in its cloud computing business and reaffirmed higher spending on artificial intelligence infrastructure.
Amazon and Apple shares moved sharply in opposite directions on Friday after the technology giants released quarterly earnings that underscored contrasting investor sentiment toward their artificial intelligence strategies.
Amazon shares climbed about 12% in premarket trading, while Apple declined roughly 7%, extending differing market reactions following their June quarter earnings announcements released on Thursday.
Apple reported quarterly revenue, earnings, and iPhone sales that exceeded market expectations. However, investors focused on the company's outlook for the current quarter, with Apple forecasting revenue growth of between 9% and 11%, below analysts' expectation of approximately 12%, according to LSEG.
The company attributed its outlook to ongoing supply constraints, including shortages of memory components used in its devices and continued competition for semiconductor manufacturing capacity. Those pressures have already contributed to price increases for Mac computers and iPads, while analysts expect higher iPhone prices later this year.
Amazon, by contrast, impressed investors with continued momentum in its cloud computing business. Revenue at Amazon Web Services (AWS) rose 37% year over year during the second quarter, marking the unit's fastest rate of expansion since 2021. AWS remains a key business for Amazon's artificial intelligence offerings, making its performance a closely watched indicator of enterprise demand for AI-related services.
The company also raised its projected capital expenditures for the year to $220 billion, up from a previous forecast of $200 billion, reflecting continued investment in AI infrastructure. While investors have increasingly questioned whether major technology companies are spending too aggressively on AI, Amazon's strong cloud growth appeared to ease concerns that its infrastructure investments are outpacing customer demand.
Tracy Woo, a principal analyst at Forrester, said AWS's performance suggests the company's infrastructure investments are aligning with market demand rather than exceeding it.
The earnings reactions continue a broader trend this reporting season, with investors differentiating between technology companies based on the perceived effectiveness of their AI strategies. Earlier in the week, Microsoft shares rallied following its results, while Meta Platforms declined as markets assessed the companies' respective AI investment plans.
Year to date, Amazon shares have gained about 4%, trailing many large technology peers, while Apple stock has risen approximately 23%. Friday's market reaction suggests investors are increasingly rewarding companies demonstrating stronger returns from AI investments while scrutinizing businesses facing operational and supply-related challenges.
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