Amazon and Microsoft Top Mag Seven Earnings Season as Investors Demand Tangible AI Returns

American tech giants Amazon and Microsoft have emerged as the top performers in Wall Street's 'Mag Seven' earnings season, according to Morningstar. The two companies saw significant gains after releasing quarterly results that demonstrated strong growth in their cloud computing and AI investments.

Amazon shares surged over 15% on Friday, marking its strongest session since 2012, while Microsoft posted a best week since 1999. This performance has led analysts to warn that the 'Mag Seven' is splitting into winners and losers as investors demand more tangible returns from their AI investments.

The divide between the two groups was highlighted by Morningstar analyst Malik Ahmed Khan, who said Amazon CEO Andy Jassy 'made a strong case for AI data center ROI.' The analyst added that this logic applies to both Amazon and Alphabet. Meanwhile, Meta's fundamentals remain strong but investors are questioning how much further its capital spending must rise.

The demand for a higher burden of proof around AI investment returns was also reflected in the performance of the 'Mag Seven' stocks. While Amazon and Microsoft saw significant gains, Alphabet rebounded after initially dropping 7% following earnings before recovering nearly the same amount after Amazon's results were released. Meta, Apple, and Tesla, on the other hand, faced pressure due to concerns over capital spending and supply constraints.