On July 28, 2026, the US stock market saw a strong catalyst—tech giant Amazon (AMZN) released Q2 earnings after the close that fully beat expectations, pushing the Nasdaq up 1.8% in regular trading, while the S&P 500 and Dow rose 0.9% and 0.5% respectively. Investor confidence in tech sector earnings recovery improved significantly, quickly repairing market sentiment from last week's volatility.
Amazon Earnings Highlights: Cloud Business and Advertising Revenue Dual Engines
According to the earnings report, Amazon's Q2 revenue reached $152.3 billion, up 13% year-over-year, beating market expectations of $148.7 billion; earnings per share (EPS) were $1.86, versus the average analyst estimate of $1.63. Particularly impressive was the performance of its cloud computing division, Amazon Web Services (AWS): AWS revenue grew 22% year-over-year to $26.3 billion, with operating margin rising to 35% from 32% a year earlier, reflecting the dual benefits of cost control and expanding AI service demand. Advertising business also performed strongly, with revenue up 18% year-over-year to $11.4 billion, accelerating for six consecutive quarters.
Amazon CEO Andy Jassy said on the earnings call: "The demand for AI inference workloads on AWS has surged, and enterprise customers are accelerating from testing to large-scale deployment. Additionally, we have significantly improved overall operational efficiency by optimizing our logistics network and cutting unprofitable businesses." The company also guided Q3 revenue of $154 billion to $158 billion, above market expectations of $152.5 billion.
Tech Sector Linked Rally, AI and Semiconductors Follow Higher
Amazon's strong results quickly rippled across the tech industry. On the day, Microsoft (MSFT) rose 2.3%, Google parent Alphabet (GOOGL) gained 1.9%, and Nvidia (NVDA) rose 3.5%. Investors expect similar cloud service providers and AI infrastructure suppliers to benefit from sustained corporate spending growth. The Philadelphia Semiconductor Index rose 2.1%, with AMD and Broadcom up 2.8% and 2.4% respectively.
Although some macroeconomic data last week raised concerns about an economic slowdown, Amazon's earnings confirmed the earnings resilience of top tech companies. Morgan Stanley analysts said: "Tech giants are benefiting from the AI wave—this is not concept hype but real revenue growth. We expect cloud and advertising businesses to remain core profit drivers over the next few quarters."
Macro Environment: Fed Rate Decision and GDP Data Provide Support
On the market backdrop, the Fed released its July rate decision on Wednesday, keeping the federal funds rate unchanged at 4.25%-4.50%, but the statement removed the phrase "remain vigilant about inflation risks," interpreted as paving the way for a rate cut later this year. Subsequently, the advance estimate for Q2 GDP annualized quarterly rate came in at 2.8%, above expectations of 2.0%, indicating a still solid economy. The CME FedWatch tool showed the market probability of a 25-basis-point rate cut in September rising to 75% from 68% before the decision.
BTIG Managing Director Julian Emanuel commented: "Credit conditions are easing, and corporate earnings growth is improving. A 'Goldilocks' scenario of disinflation without recession is playing out. This provides a solid floor for US stocks."
Index Performance and Fund Flows
As of the close on July 28, the S&P 500 stood at 5,843, up 16.2% year-to-date; the Nasdaq at 21,938, up 22.8% year-to-date; and the Dow Jones Industrial Average at 39,821, up 9.5% year-to-date. On a sector basis, information technology and communication services were the top gainers.
Fund flow data showed US equity funds attracted about $11.2 billion in net inflows this week, the highest in six weeks. Among them, tech sector ETFs accounted for over 40% of net inflows, indicating institutional investors are increasing positions in tech stocks. In the bond market, the 10-year Treasury yield fell to 4.12%, reflecting rising expectations of rate cuts.
Outlook and Risk Warnings
In the coming week, markets will focus on results from several tech giants: Apple, Meta, and Tesla will report earnings from July 29 to 31. If earnings continue to improve, US stocks are likely to extend gains. However, geopolitical risks (such as the Middle East situation) and oil price volatility still warrant caution. Additionally, weakness in the European economy may drag on multinationals' overseas revenue.
Overall, Amazon's earnings strengthened the narrative of tech earnings growth, and with the Fed's policy shift expectations, US stocks have sufficient short-term momentum. However, investors still need to balance valuation and growth to avoid excessive chasing.
VNCapital Asia will continue to track US stock dynamics, providing real-time insights and in-depth analysis.