AI stocks jumped sharply on Thursday as investors cheered strong AI demand, especially after Microsoft reported better-than-expected cloud growth. The Nasdaq Composite rose 2%, the S&P 500 gained 1%, and the Dow Jones Industrial Average added 308 points, showing broad strength in technology stocks.
Microsoft shares surged 15% after the company reported strong growth in its Azure cloud business, boosting confidence in AI spending. Microsoft’s Azure cloud business grew 43% in its latest quarter, showing that companies are still spending heavily on AI services. The strong Microsoft results lifted semiconductor stocks, with the iShares Semiconductor ETF (SOXX) rising more than 7%.
Nvidia AI demand
The rally also helped major AI chipmaker Nvidia, as investors became more confident that demand for AI hardware remains strong. Nvidia’s Data Center revenue jumped 92% in its latest reported quarter, highlighting strong demand for AI chips.
Even though AI demand remains strong, investors are watching whether huge spending on AI chips, data centers and power infrastructure will generate enough profits and cash flow in the future. The report said, “The market is not questioning AI demand. It is questioning whether record spending on chips, data centres and power will generate enough profit and cash flow to justify it”, according to CNBC.
AI stock
Despite Thursday’s rally, many AI stocks have fallen sharply in recent months. Across 49 AI and AI infrastructure companies in the US, Taiwan and South Korea, the average stock is still 40.7% below its all-time high. Thirteen AI-related companies have dropped by at least 50% from their record highs, showing that the sector has gone through a deep correction.
The memory-chip companies and highly leveraged AI infrastructure builders were among the hardest hit during the recent selloff. The broader US stock market has remained relatively strong despite the correction in AI stocks, according to CNBC.
On July 29, the S&P 500 was only about 2% below its record high, while the Nasdaq was close to a 10% correction and the Philadelphia Semiconductor Index had entered a technical bear market.
Also read: Microsoft spends $41 billion on AI as Azure revenue jumps 43%, beats Wall Street estimates
Nebius Group
Nebius Group shares climbed after the company signed a computing power deal worth more than $1 billion with Reflection AI through 2029. The news pushed Nebius shares up more than 4% in premarket trading after the deal was announced.
On Thursday, July 30, Nebius shares were trading up 12.39%. MarketBeat said Nebius’ long-term growth depends on adding more AI data center capacity over the next two years. Earlier reports that Meta could sell excess AI computing capacity triggered a 12%-15% selloff in neocloud companies, including Nebius and CoreWeave.
A proposed one-year moratorium on new hyperscale data centers in New York could create regulatory risks for Nebius, although it may also shift future expansion to other regions. MarketBeat also noted that Nebius has seen repeated double-digit price swings and sharp premarket moves, driven by WallStreetBets-style trading activity and aggressive profit-taking.
Amazon
Amazon shares are attracting investor attention because the stock is still trading about 13% below its 52-week high despite strong growth in its cloud business. Amazon Web Services (AWS) reported 28% growth while delivering its best operating margin in 15 quarters. According to Yahoo Finance, Wall Street’s average price target of $314 suggests around 27% upside for Amazon shares. 62 out of 66 analysts currently rate Amazon stock as a Buy.
Amazon shares have underperformed despite the company’s 74% earnings growth. Amazon’s Trainium2 AI chips are fully subscribed, while Trainium3 capacity is almost fully committed. These commitments are expected to support Amazon’s AI revenue growth through 2027 with customers including OpenAI and Anthropic. Yahoo Finance said Amazon’s current valuation looks attractive because AWS is growing at its fastest pace in years while the stock price has yet to fully reflect that growth.
Bloom Energy
Bloom Energy remained in focus after Wells Fargo lowered its price target on the stock from $217 to $176 while maintaining an “equal weight” rating. The new Wells Fargo target implies a potential downside of about 16% from the stock’s current price. Other analysts continue to have mixed views on Bloom Energy despite the Wells Fargo downgrade.
Robert W. Baird maintained an “outperform” rating with a $310 price target. TD Cowen reaffirmed a “hold” rating with a $235 target price, according to INDMoney. UBS lowered its target price from $350 to $300 but kept a “buy” rating. Morgan Stanley maintained an “overweight” rating with a $310 target price. Roth Capital raised its target price from $225 to $285 while keeping a “neutral” rating.
According to MarketBeat data, Bloom Energy has three strong buy ratings, ten buy ratings, twelve hold ratings and one sell rating from analysts. Bloom Energy currently has a consensus rating of “Moderate Buy” with an average analyst price target of $246.18.
