Global tech rally ignites risk appetite as Microsoft results ease AI spending fears

A tech bounce and macro relief combine to lift global markets

Technology stocks led a broad global rally, with investor spirits lifted by hopes that the recent sell-off in AI-related names had run its course. The catalyst was Microsoft’s quarterly update, which showed Azure cloud revenue growing vigorously while its capital expenditure outlook came in below market fears, suggesting that the huge sums flowing into artificial intelligence may not yet be a bubble. The Nasdaq jumped 2.8% and the S&P 500 added 1.7%, dragging European and Asian indices higher.

The renewed appetite for risk was reinforced by a mixed batch of US economic data. Second-quarter GDP grew just 1.5%, undershooting forecasts, while the Fed’s preferred inflation gauge – the core PCE price index – rose only 0.1% month-on-month. Taken together, the figures boosted the view that the Federal Reserve has room to keep rates on hold and that the chance of another hike has shrunk further. The 10-year Treasury yield fell 3 basis points to 4.65%, and Brent crude dropped 1.4% to $85.40 a barrel.

Semiconductor stocks were the standout performers globally. In the US, Micron Technology rallied 18.4% and AMD climbed 13%. The move was even more extreme in Asia, where South Korea’s Kospi index surged roughly 16%, driven by SK Hynix up nearly 30% and Samsung Electronics up 25%. Japan’s Nikkei 225 rose 4% after the Bank of Japan held rates at 1%, while Hong Kong’s Hang Seng bucked the trend with a marginal loss. European bourses also closed higher, supported by stronger-than-expected eurozone GDP growth of 0.4% quarter-on-quarter, though the Bank of England kept its rate at 3.75% and highlighted energy-price uncertainty tied to the Middle East conflict.

The after-hours picture was less uniform. Apple’s profit jumped 27%, but a warning of supply-chain headwinds dragged its shares down 6.1% in extended trading. Amazon’s net profit soared 245% and its stock rose 10.4% after the bell, underscoring that the AI theme is delivering divergent outcomes even among mega-caps. Meanwhile, Turkish equities bucked the global trend as the BIST 100 fell 1.55% amid domestic selling pressure, with analysts pointing to 13,200 and 13,100 points as near-term support.

What Microsoft, Meta and the macro data really tell us about the AI trade

Microsoft’s Azure and capex: a sigh of relief for AI bulls

The most consequential datapoint of the session was not the revenue beat itself but the signal it sent on spending. Microsoft’s capex guidance came in below worst-case assumptions, implying that the ramp-up in AI infrastructure is being managed more cautiously than feared. That immediately eased the concern that the industry is in a capex binge that will crush returns. The stock’s 15.5% surge shows that, for now, the market is willing to reward growth that does not come with an uncontrolled spending tail.

Meta and Apple: the fine print that dampens after-hours optimism

Meta’s revenue rose 28% to $60.8 billion, yet net income fell 14% and free cash flow declined – a reminder that top-line momentum does not always flow to the bottom line when operating costs rise. Apple’s after-market slide, despite a 27% jump in net profit, was driven by a cautious forward outlook linked to supply-chain constraints. Together these numbers inject a note of caution into the rally. The ‘AI trade’ is not monolithic; individual company execution and guidance will increasingly drive dispersion.

Why macro data gave investors two reasons to buy

Below-consensus GDP growth and cooling core inflation create a Goldilocks backdrop for stocks: the economy is slowing enough to justify a pause in monetary tightening but not enough to signal recession. The 3.3% annual core PCE reading still sits above the Fed’s target, but the direction of travel matters more than the level. The fall in the 10-year yield and the soft jobless claims print reinforce the narrative that the rate path is stabilising, removing one of the main headwinds for growth-sensitive sectors.

Semiconductor frenzy: contagion, not fundamentals

The single-day moves in South Korean chip stocks – SK Hynix up nearly 30%, Samsung up 25% – are extreme by any standard and cannot be explained by overnight news alone. They likely reflect a combination of short-covering, global rebalancing into laggard chip names, and perhaps local policy signals that were not detailed in the initial reports. While the AI capex story supports a structural demand increase for memory and logic chips, such violent moves often attract profit-taking quickly.

How to navigate the risk-on surge: earnings, data and geopolitical risks

• Watch the PCE and labour prints: The next US inflation and jobs data will either reinforce or challenge the ‘peak rates’ trade. If core PCE surprises upward, bond yields and the dollar could reverse, hitting tech valuations.
• Differentiate within the Mag 7: Microsoft’s capex discipline and Amazon’s profit explosion are positive signals; Apple’s supply-chain caution is a near-term risk. Portfolio exposure should be weighted towards names showing cost control alongside AI growth.
• Monitor South Korean chip valuations: SK Hynix and Samsung are pricing in a very bullish AI memory scenario. Any hint of softening demand or margin compression could trigger a rapid unwind of the recent spike.
• Geopolitical volatility remains an overlay: Hopes for eased Middle East tensions can lift oil-exposed sectors quickly, but the situation is fragile. Position for oil price swings and currency effects, especially in yen and euro crosses.