On July 28, 2026, as Microsoft, Amazon, Google parent Alphabet, and Apple reported their quarterly earnings for the quarter ending June, the US stock market faced a major test of performance validation. Although overall revenue continued to grow, the sustained massive investment in AI infrastructure began to significantly erode profits, causing multiple companies to miss earnings expectations and sparking a market reassessment of the pace of AI commercialization. Investors are no longer blindly chasing the 'AI halo' but focusing on earnings delivery ability, leading to a clear divergence in tech stock performance.
Microsoft: Cloud Growth Slows, AI Costs Weigh on Net Profit
Microsoft's fiscal fourth quarter (ending June 30, 2026) reported revenue of $69.8 billion, up 12% year-over-year, slightly above the market expectation of $69.5 billion. However, net profit was $23.5 billion, up only 4% year-over-year, missing the expected $24.2 billion. This was the second consecutive quarter Microsoft missed net profit expectations, primarily due to a 45% surge in capital expenditure for the Intelligent Cloud division (Azure) to build new AI data centers and purchase GPU chips. Azure total revenue grew 22%, with AI services contributing about 6 percentage points of growth, but the gross margin for AI services was lower than traditional cloud business, dragging the overall cloud gross margin down by 2 percentage points.
CEO Satya Nadella emphasized in the earnings call that AI investment is a long-term strategy but did not provide a clear timeline for profitability. After the earnings release, Microsoft shares fell 3.5% in after-hours trading. Analysts noted that market patience with AI is wearing thin, especially as capital spending continues to rise without a corresponding increase in revenue growth.
Amazon: AWS Growth Slows to Record Low, Advertising Becomes Bright Spot
Amazon's second-quarter revenue was $152 billion, up 10% year-over-year, in line with expectations. However, AWS revenue grew only 11% to $26 billion, marking the slowest growth on record. AWS operating margin also fell from 28% last year to 25%, as the company increased discounts on AI model training and inference infrastructure to gain market share. Overall net profit was $12.5 billion, up 8% year-over-year, slightly below expectations.
In contrast, Amazon's advertising business performed strongly, with revenue up 18% to $13.5 billion, driven by Prime Video and sponsored brand ads. Despite this, investors are concerned about the AWS slowdown, and Amazon shares edged down 0.8% in after-hours trading. Analysts believe AWS faces fierce competition from Microsoft Azure and Google Cloud, especially as Google Cloud recently launched a series of AI services based on its own chips at more attractive prices.
Apple: iPhone Sales Beat Expectations, Service Revenue Record
Apple's fiscal third quarter (ending June 27, 2026) reported revenue of $91.9 billion, up 5% year-over-year, above the expected $90.2 billion. iPhone revenue was $41.8 billion, up 8% year-over-year, driven by strong sales in China boosted by iPhone Pro Max trade-in promotions. Service revenue reached $24.2 billion, up 15% year-over-year, an all-time high, with steady growth in App Store, Apple Music, and iCloud subscribers. Net profit was $24.5 billion, up 12% year-over-year, beating expectations.
Apple did not significantly increase AI-related capital spending like Microsoft and Amazon, but instead provides AI features through upgrades to existing hardware (such as A20 chips) and software (such as Siri large language model). This conservative strategy was well received by the market, with Apple shares rising 1.2% in after-hours trading. Analysts noted that Apple's solid performance shows not all tech companies need to invest heavily in AI infrastructure; differentiated product strategies can also work.
Market Interpretation: AI Investment ROI Becomes Focus
This earnings season highlights a core theme: whether the tech giants' AI 'arms race' has gone beyond reasonable limits. Microsoft and Amazon's combined capital spending exceeded $40 billion, accounting for 65% and 58% of their free cash flows respectively. The revenue growth from these investments has not fully materialized, leading investors to question 'when will returns be seen?'
Investment bank Goldman Sachs released a report noting that AI infrastructure investment will reach $150 billion in 2026, but AI service revenue is expected to be only $22 billion, a severe imbalance in ROI. This situation resembles the internet bubble period in 2000, with massive capital investment but unclear profit models. However, Goldman also believes that in the long term, AI will reshape various industries, but short-term volatility is unavoidable.
From a market performance perspective, the Nasdaq index first fell and then rose after the earnings release, eventually closing up 0.3%. There was a clear divergence within the tech sector: AI concept stocks (such as Nvidia, Super Micro) fell on concerns of slowing demand, while stocks with relatively conservative spending like Apple and Meta attracted capital inflows.
US Stock Market Outlook: Tech Valuations Face Correction Pressure
The current S&P 500 forward price-to-earnings ratio is about 22 times, with the tech sector's P/E as high as 38 times. If AI profits continue to disappoint, high valuations for tech stocks will be unsustainable. The Federal Reserve's monetary policy adds uncertainty—although the rate decision today held steady, the dot plot suggests only one rate cut this year, with high interest rates pressuring growth stock valuations.
Looking ahead, investors should focus on: first, when AI-related capital spending can translate into scalable revenue growth; second, whether tech companies can improve margins through price increases or efficiency gains; third, whether a macroeconomic soft landing can continue. If leading stocks experience significant pullbacks after earnings season, it may present buying opportunities, but caution is needed.
For A-share or Hong Kong stock investors, the divergence in tech stocks may create cross-market arbitrage opportunities. For example, among US-listed Chinese stocks, companies like Baidu and Baidu Cloud that have already achieved AI profitability are worth watching; while AI concept stocks driven purely by narratives need to be cautious of risks.
Conclusion
The July 2026 tech earnings season reveals the 'B-side' of the AI wave - the dilemma of huge spending and profit pressure. Apple's model proves that conservative and user-experience-focused strategies can also achieve good results; while Microsoft and Amazon's aggressive strategies face strict market scrutiny. In the US stock market outlook, tech stocks are no longer a sector where simple holding yields profits; stock picking and attention to earnings quality become key. In the coming months, as more small and mid-cap tech companies report earnings, the true face of AI commercialization will become clearer, and investors need to remain vigilant and patient.
