The Nasdaq surged approximately 2% to 26,440 earlier today as Big Tech stocks rallied on the back of strong earnings from the sector’s largest companies. The index’s gain reflected renewed investor confidence in artificial intelligence spending and cloud infrastructure expansion, with major technology firms beating expectations and raising guidance for the remainder of 2026.
The rally was fueled by earnings reports from companies driving the AI investment boom. Palantir Technologies delivered a massive beat on August 3, reporting Q2 revenue of $1.94 billion, up 93% year-over-year, and adjusted earnings per share of $0.41, which surpassed consensus estimates of $0.34 by 20.6%, according to multiple sources. The company also raised its full-year revenue guidance, signaling strong demand for its AI and data analytics platforms.
Microsoft’s fourth-quarter fiscal 2026 earnings, reported on July 29, showed Azure and other cloud services revenue grew 43% in the quarter, accelerating from 40% growth in the prior quarter, according to the company’s investor relations disclosures and multiple financial outlets. Azure annual revenue surpassed $100 billion for the first time, marking a key milestone in the company’s cloud business expansion.
According to Barron’s and Société Générale analysis, the market has cleared a “momentum shock” tied to second-quarter earnings season and a recent rotation within the tech sector. Société Générale’s chief U.S. equity strategist Manish Kabra noted that the best evidence for AI expansion comes from hyperscalers’ cloud revenue growth, with Google reporting 82% growth, Microsoft at 43%, and Amazon at 37%. Cloud service backlogs rose by $300 billion and capex guidance increased by $150 billion, signaling sustained investment in AI infrastructure.
The Nasdaq Composite has gained more than 7.6% over the past four days, and the S&P 500 reached a fresh record high, driven primarily by the so-called Magnificent Seven technology giants. Those megacap stocks added $678.3 billion in market capitalization on a single day earlier this week, according to Wall Street Journal reporting. Microsoft shares turned positive for the year in early trading, having gained nearly 27% since their earnings report, while Google is up around 18% and Amazon has advanced more than 20% over the same timeframe.
This rally represents a reversal from July’s turbulent trading, which included the highest Treasury bond yields since 2007, geopolitical tensions that drove crude prices higher, and a Federal Reserve rate decision that left investors uncertain about future policy direction. Analysts including Bret Kenwell of eToro noted that the renewed surge in megacap tech “may signal a long-overdue rebalancing within the AI trade” and could help stabilize the broader market through the seasonally difficult August-to-September stretch.
The rally has also seen beaten-down software stocks rebound sharply, with the iShares Expanded Tech-Software Sector ETF up more than 18% from its multi-month low reached on June 25, according to Barron’s analysis. Chip stocks, which had led earlier in the year, have pulled back, with the PHLX Semiconductor Index falling 18.5% from its late June peak, reflecting a tactical shift in investor focus toward software and cloud infrastructure companies.
Sources
- CNBC — Nasdaq composite level and intraday gain data
- Barron’s — Big Tech earnings analysis, Société Générale commentary on momentum shock, cloud growth figures, and software/chip sector rotation
- Zacks — Palantir Q2 2026 earnings beat details (revenue $1.94B, EPS $0.41)
- MarketBeat — Palantir EPS beat confirmation ($0.41 vs. $0.34 consensus)
- Microsoft Investor Relations — Azure growth at 43%, cloud revenue milestone of $100 billion
- Wall Street Journal — Magnificent Seven market cap gains, cloud growth figures
- Yahoo Finance — eToro analyst commentary on megacap tech rebalancing
