Tech titans Apple and Amazon both released their second-quarter financial results on Thursday, providing a significant gauge of investor sentiment toward the sector during a period of intense scrutiny regarding massive artificial intelligence spending. Both companies managed to outperform Wall Street revenue projections.
Amazon announced revenue of $200.6bn, surpassing the $196.47bn anticipated by analysts. The company saw growth in its AWS cloud computing division and exceeded market expectations for advertising revenue, though it did report a decline in free cash flow. Following the announcement, Amazon shares rose by more than 8% in after-hours trading.
Shareholders have become increasingly sensitive to the levels of capital expenditure dedicated to AI, as industry players continue to pour resources into building out capabilities for future gains. This focus on free cash flow has led to heightened volatility, with investors reacting sharply to reports of higher-than-expected AI costs.
Apple, meanwhile, has been viewed by some investors as a safer option during the broader market turbulence driven by AI and the recent selloff in chip stocks. While Apple’s stock has climbed approximately 23% this year, leading the "Magnificent Seven" group that includes Meta, Microsoft, Alphabet, Amazon, Tesla, and Nvidia, its share price saw a slight dip on Thursday. This decline followed the company's report that revenue from its services division fell short of market expectations.
This earnings call marked the final report for CEO Tim Cook before he concludes his 15-year tenure as Apple’s chief executive. Under Cook’s leadership, the company’s market value grew from roughly $350bn in 2011 to exceed $5tn just days before Thursday’s event. Earlier this month, Apple surpassed Nvidia to become the world’s most valuable company.
John Ternus, a long-term hardware engineering executive who joined Apple in 2001, is set to succeed Cook. Ternus has indicated plans to focus on expanding Apple’s entertainment sector, which has seen recent success with projects like the film F1 and streaming series such as The Studio. Addressing the transition, Cook stated, "As you know, this will be my final earnings call. I am beyond excited for John to step into his new role and lead Apple into its next era. He is truly one of a kind and there is no better person to take the helm of the company."
