Amazon posted its biggest rally since 2012 after AWS revenue surged to $42.2 billion, while Microsoft’s Copilot adoption doubled to 30 million users.
- Amazon and Microsoft emerged as the Mag Seven’s clearest winners as investors rewarded visible AI growth and returns.
- Morningstar said the group is splitting as Wall Street demands a “higher burden of proof” for AI investments.
- Alphabet rebounded on Amazon’s AI investment case, while spending and supply concerns pressured Meta, Apple and Tesla.
Amazon and Microsoft have emerged as the clearest winners from a volatile “Magnificent Seven” earnings season, as accelerating cloud growth and measurable AI adoption convinced investors that their massive infrastructure investments are beginning to pay off.
Mag Seven Splits Over AI Returns
The once-unified trade comprising Alphabet (GOOG, GOOGL), Amazon (AMZN), Apple (AAPL), Meta Platforms (META), Microsoft (MSFT), Nvidia (NVDA) and Tesla (TSLA) is increasingly splitting into winners and losers, according to Morningstar.
“We’re going to start to see a bifurcation among the Mag Seven,” Franklin Equity portfolio manager Sara Araghi told Morningstar. “Some are winning, and some are losing.” The divide depends on whether companies can demonstrate near-term AI monetization or provide evidence that their investments will generate sufficient returns.
Amazon shares surged more than 15% on Friday, their strongest session since 2012, while Microsoft posted its best week since 1999. “For the first quarter, the market didn’t reward [Amazon] for quite nice growth, and wanted more,” Araghi said. “They delivered more, and you’re seeing the margin benefit in AWS.”
Microsoft also supplied measurable proof points as Azure accelerated and Microsoft 365 Copilot adoption doubled quarter-over-quarter. “Revenue growth is accelerating, and product adoption is measurable,” Araghi said.
Meta’s fundamentals remained strong, but investors questioned how much further its capital spending must rise. Apple, meanwhile, fell 7.5% on Friday as the AI buildout intensified supply and memory-cost pressures. Alphabet initially dropped 7% after earnings before rebounding by nearly the same amount following Amazon’s results. Morningstar analyst Malik Ahmed Khan said Amazon CEO Andy Jassy “made a strong case for AI data center ROI.”
“Amazon came out and presented their view on why the spending is value-accretive, but that logic holds for both Amazon and Alphabet,” Khan said. The bottom line, Araghi said, is that investors now require “a higher burden of proof” around AI investment returns.
AWS Growth Validates Amazon’s AI Bet
Amazon’s rally followed a 37% jump in AWS revenue to $42.2 billion, its fastest growth since 2021. The unit generated $16.6 billion in operating income and reached a $169 billion annualized revenue run rate.
Amazon raised its 2026 capital-spending forecast to $220 billion from $200 billion. CEO Andy Jassy said AI returns were slightly ahead of the core AWS business at a comparable stage, while demand would exceed capacity through 2027. “The demand we already have for 2028 is striking,” he said.
Microsoft surged 15% as Azure growth accelerated to about 43% and paid Microsoft 365 Copilot users doubled to roughly 30 million. The rally added approximately $450 billion to its value in one session and more than $600 billion during the week.
Alphabet Rebounds As Meta, Apple Retreat
Alphabet recovered its post-earnings decline after Amazon’s results strengthened the case for its own $195 billion to $205 billion spending plan. Meanwhile, Meta fell 8% despite 28% revenue growth as investors questioned its projected capital spending of up to $145 billion. Apple dropped more than 7%, erasing over $350 billion in value, after weak guidance and AI-driven memory and chip constraints clouded its outlook. Tesla also shed about $7 billion after reporting negative cash flow and forecasting higher spending.
How Do Retail Traders Feel About Mag 7 Stocks?
On Stocktwits, retail sentiment was ‘extremely bullish’ for AAPL, MSFT and AMZN, with ‘high’ message volume for AAPL and MSFT and ‘extremely high’ activity for AMZN. Sentiment was ‘neutral’ for NVDA and GOOG amid ‘normal’ message volume, while META drew ‘bullish’ sentiment and ‘high’ activity. TSLA was the outlier, with ‘bearish’ sentiment amid ‘normal’ message volume.
Over the past year, Alphabet led the Magnificent Seven with a nearly 97% gain, followed by Apple at 51% and Amazon at 32%, while Meta and Microsoft fell 21% and 6%, respectively.
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