US Futures Rise as Amazon Cloud Surge Offsets Apple Outlook

Author: Martin Lam

On Friday, US stock index futures experienced an uptick, driven by Amazon's impressive cloud-computing performance, which bolstered confidence in investments related to artificial intelligence (AI). However, these gains were somewhat tempered by a significant decline in Apple's stock following a disappointing sales forecast.

Market Snapshot

• S&P 500 futures rose by 0.26% to 7,491.75 points.
• Nasdaq 100 futures increased by 0.7% to 28,440 points.
• Dow Jones futures climbed by 0.2% to 52,506 points.

Amazon's Cloud Growth Accelerates

Amazon.com saw its stock surge approximately 9% in after-hours trading after reporting a 37% year-over-year revenue growth at Amazon Web Services (AWS), reaching $42.2 billion for the quarter ending June 30. This growth marked AWS's fastest expansion in 18 quarters, surpassing analysts' expectations of 31.2% growth.

In response to the rising demand for cloud services, Amazon increased its 2026 capital expenditure forecast by 10% to $220 billion, focusing on expanding data centers and AI infrastructure. Despite recording a negative free cash flow of $7.6 billion over the past year, the company's AWS contract backlog grew to $496 billion, indicating strong future revenue potential.

Apple's Forecast Overshadows Sales Beat

Apple reported a fiscal third-quarter revenue of $109.42 billion, a 16.4% increase from the previous year, with earnings per share of $2.02, surpassing analyst expectations. However, the company's forecast for the September quarter projected revenue growth of only 9% to 11%, falling short of Wall Street's 12% estimate. This was compounded by warnings of component shortages that could hinder order fulfillment.

While iPhone and Mac sales exceeded forecasts, concerns arose regarding the slower growth in services revenue, which increased by 12.1% but missed expectations.

AI Trade Regains Momentum

The contrasting results from Amazon and Apple highlighted a divide in the technology sector, with investors favoring companies that demonstrate rapid growth in cloud and AI revenues. Microsoft, for instance, saw a 15% surge in its stock after a positive cloud forecast, while Meta Platforms experienced an 8% decline following a drop in free cash flow.

Analysts predict a 40% increase in aggregate second-quarter earnings among S&P 500 companies, largely driven by AI-related businesses.

Rates and Geopolitics Remain Risks

Market participants are also evaluating the Federal Reserve's decision to maintain interest rates between 3.50% and 3.75%. Futures pricing indicates a 59% probability of a rate increase in September, down from 82% a week prior, following softer inflation and economic growth data. Additionally, geopolitical tensions in the Middle East, particularly regarding the Strait of Hormuz, continue to pose risks to market stability.

Outlook

Investors will closely monitor the stock movements of Amazon and Apple to gauge the sustainability of the technology rally. Furthermore, the upcoming US Employment Cost Index report will provide insights into wage pressures, while developments in Fed expectations and geopolitical situations will influence market direction.