Microsoft's shares jumped nearly 15% to about $451 following its July 29 earnings report, marking the biggest gain in months. Trading volume surged to levels unseen since late June, suggesting confident buying. Still, the volume hasn't yet surpassed the heavy selling pressure from mid-June, leaving some uncertainty about the rally's strength.
Institutional investors' behavior adds to the cautious tone. The Chaikin Money Flow indicator, which tracks big money inflows, nearly dipped below zero before the earnings but bounced back to a modest positive. Yet it remains under the peak seen in late July, signaling that deep-pocketed buyers haven't fully committed.
Microsoft's fundamentals reveal why optimism lingers. The company invested $41 billion building AI data centers, backed by a $678 billion portfolio of signed customer contracts. This locked-in demand shows that the spending is supported by real business, not just hype. The cloud division, Azure, reported 43% year-over-year growth and expects to accelerate to 45%, a sign of strong future revenue potential.
Wall Street largely backs Microsoft, with 24 out of 25 analysts rating it a buy. Barclays stands as the sole cautious voice, trimming its target price, reflecting some wariness about the stock's volume dynamics.
Amazon stands out as the most unanimously favored stock among analysts. All 28 covering firms rate it a buy, showing strong confidence in its growth prospects. The company's performance amid the earnings season positions it as a key player to watch in August.
