Microsoft Rises 15% on Strong Cloud Growth; Storage Stocks Surge

Article by: Tide Research

The market, which was in despair just yesterday, turned around completely overnight. The U.S. June PCE price index fell to 3.7% year-over-year, continuing the trend of cooling inflation, combined with Microsoft’s pre-market earnings report showing its fastest cloud growth in four years—both catalysts ignited Thursday’s opening.

Microsoft's stock surged over 15% in a single day, marking its largest one-day gain since 2008, adding $450 billion to its market capitalization in one day and setting a new record for the largest single-day market cap increase. Memory chip stocks followed suit with a collective rally: Kioxia jumped nearly 32%, SanDisk rose about 26%, Micron increased over 18%, and the Philadelphia Semiconductor Index climbed more than 8%, ending a five-day losing streak.

However, the same report showed that the initial Q2 GDP growth rate was only 1.5% annualized, significantly below the market expectation of 2.1%. After hours, Apple and Amazon also released their respective earnings reports.

The Nasdaq rose 2.78%, the S&P 500 gained 1.66%, and the Dow Jones increased 1.19%, with all three indices surging sharply.

Microsoft was undoubtedly the star, with its stock surging over 15% in a single day—the largest one-day gain since October 2008—and adding $450 billion in market value in one day, a record-breaking increase in U.S. stock market history. The earnings report showed that the company’s cloud revenue grew by more than 40%, the fastest pace in four years, while capital expenditures came in below market expectations, aligning perfectly on both revenue and profitability fronts.

The Philadelphia Semiconductor Index rose over 8%, ending a five-day consecutive decline. Memory-related stocks surged across the board, with the Roundhill Memory ETF jumping 16.7% in a single day. Kioxia ADR rose nearly 32%, SanDisk increased about 26%, Micron Technology gained over 18%, SK Hynitz rose over 17%, and both Lumentum and Western Digital posted gains exceeding 15%.

The Livemore China ADR Leading Index rose 3.02%, with most major European indices closing higher; Germany's DAX30 gained 0.45%.

WTI crude oil settled down 1.03% at $83.59 per barrel. Brent crude oil settled down 1.88% at $89.03 per barrel. COMEX gold rose 1.68% to $4,166 per ounce. COMEX silver rose 2.12% to $59.32 per ounce.

Bitcoin opened at $63,902.90, flat compared to the previous day, and rose to $64,838.92 during early trading; Ethereum opened at $1,908.34, down 0.6%, and climbed to $1,923.23 during early trading.

In June, the U.S. PCE price index rose 3.7% year-over-year, a notable decline from May’s 4.1%, and also fell 0.1% month-over-month—marking the first monthly decline in over six years. The core PCE index, excluding food and energy, rose 3.3% year-over-year, in line with market expectations, and increased just 0.1% month-over-month, below the forecasted 0.2%. This key inflation indicator favored by the Federal Reserve has provided reassurance to markets.

In the same report, the initial annualized growth rate of Q2 real GDP came in at just 1.5%, significantly below the market expectation of 2.1%, while the personal savings rate fell to 2.7%, the lowest level since June 2007. Although slowing inflation should be good news, when viewed alongside the decelerating growth and the savings rate hitting a trough, it suggests that consumers’ confidence and financial cushion may be weakening.

After the data release, gold briefly surged then pulled back, the U.S. dollar index first touched a low before rebounding, and all three major stock index futures rose—market participants seem inclined to interpret this mixed report as a reason for the Fed to no longer maintain an aggressive stance.

Apple's third-quarter revenue reached $109.42 billion, a 16% year-over-year increase, surpassing the market expectation of $108.85 billion. Earnings per share were $2.02, up 29% year-over-year, also exceeding expectations. However, the company provided a fourth-quarter revenue guidance of 9% to 11% growth, below the market expectation of 12.1%. This relatively conservative outlook resulted in a muted reaction in after-hours trading.

The story from Amazon is more compelling: second-quarter net sales reached $200.6 billion, a 20% year-over-year growth, surpassing the expected $197.01 billion. AWS cloud revenue grew 37% year-over-year, the fastest pace since 2021, with order backlog reaching $496 billion. The company also raised its full-year capital expenditure forecast from $200 billion to $220 billion. CEO Andy Jassy stated that the current surge in investments is unlikely to slow down in the short term, with AI demand expected to remain significant through 2028. This earnings report sent Amazon’s stock up nearly 10% in after-hours trading.

Meta also disclosed on the same day that it has committed nearly $700 billion in future spending through long- and short-term agreements, primarily directed toward AI data centers and cloud computing. Market rumors further indicate that a data center developer partnering with Anthropic is planning a $15 billion financing round to build a large data center and accompanying power plant in Texas, with Google providing financial guarantees and chip support for the transaction.

Yesterday, the market was gloomy as storage stocks had fallen for five consecutive days and the Nasdaq had entered correction territory. Today, Microsoft’s earnings report completely reversed all the pessimism—this extreme intraday reversal highlights that the selling pressure accumulated over the past few weeks was primarily driven by positioning and sentiment, not fundamental issues with AI as a core theme. As long as one major player delivers convincing evidence of growth, capital will flow back without hesitation.

Amazon has increased its capital expenditure to $220 billion, and combined with Meta’s nearly $700 billion spending commitment, it shows that major tech giants are not scaling back their AI investments—they are doubling down.

This directly contradicts the recent market anxiety over return on investment: while the numbers on paper show increasing spending, the market still appears willing to pay as long as tangible metrics like cloud business growth and order backlogs keep pace.

What truly needs attention is the divergent signals behind the PCE and GDP data: while cooling inflation has given the Fed some breathing room, slowing economic growth and a bottoming-out savings rate suggest the consumption engine may itself be losing momentum. If upcoming data confirm this slowdown is a sustained trend rather than a one-time fluctuation, the question for next week’s market will be whether today’s tech-driven rally can withstand the headwinds from macroeconomic pressures.