Microsoft jumps 15% on upbeat forecast, drives Wall Street higher

Microsoft’s share price surged more than 15% on Thursday, adding roughly $450 billion to its market value and delivering the steepest single‑day percentage gain the company has recorded in 18 years. The rally came after the tech giant released a forecast that lifted expectations for quarterly sales and cloud growth while showing capital spending below analysts’ estimates. In a market still wary of the cash‑flow impact of AI‑driven investment, the news instantly turned the tone on Wall Street and set a positive backdrop for the day’s trading.

Microsoft told investors it expects to keep generating cash through its fiscal 2027, a year that began on 1 July.

"These are true battleground stocks. Investors can't make up their minds whether the ROI on the massive capex spending is going to be worthwhile or not,"

Jed Ellerbroek, portfolio manager, Argent Capital Management, via AOL

"Microsoft delivered yesterday, and maybe Microsoft is going to be able to move itself from the 'battleground' camp to be a 'trusted AI winner' stock,"

Jed Ellerbroek, portfolio manager, Argent Capital Management, via AOL

The broader market rally was swift. The S&P 500 climbed 1.66% to finish at 7,437.63, the Nasdaq added 2.78% to reach 25,122.18, and the Dow Jones Industrial Average rose 1.19% to 52,208.06. Seven of the eleven S&P 500 sector indexes posted gains, led by technology up 5.2% and consumer discretionary up 1.6%.

Chip makers, already sensitive to AI spending trends, rallied alongside Microsoft. The PHLX chip index surged 8.2%; Micron Technology jumped 18%, SanDisk rose 26% and AMD logged a 13% gain. By contrast, Meta Platforms’ shares fell after the social‑media firm disclosed a 91% drop in second‑quarter free cash flow, underscoring the divergent fortunes within the AI‑linked universe.

While U.S. Markets cheered, the reaction was not uniform across the globe. In Australia, the ASX snapped a three‑day winning streak, slipping 0.8% to 8,967.70 as investors trimmed exposure to gold miners amid heightened inflation concerns linked to the Middle‑East conflict. The local market’s dip reflected a separate narrative: the ASX was still processing the Federal Reserve’s decision to keep rates steady, a move that pushed long‑end U.S. Bond yields to a 19‑year high.

“Wall Street’s decline came as investors digested the Fed’s decision to keep rates on hold, which saw long‑end bond yields climb to a 19‑year high on concerns about a potential policy error,” noted IG senior market analyst Tony Sycamore, as reported by the Australian Financial Review. The same day, the Dow fell 2.2% and the S&P 500 dipped 1.5%, but futures pointed to a modest bounce once U.S. Trading resumed.

In the Australian market, gold miners bore the brunt of the sell‑off despite gold holding steady at $4,054 an ounce. Resolute Mining slid 7.2%, Genesis Minerals fell 5.7% and Newmont dropped 1.8%. Materials stocks were the main drag, while the technology sector was the sole group to finish in the green, with WiseTech Global up 6.7% and Xero up 1.4%.

Key market moves on Thursday

• Microsoft (MSFT) – +15%+, $450 billion market‑value boost.
• PHLX chip index – +8.2%.
• Micron Technology – +18%.
• SanDisk – +26%.
• AMD – +13%.
• Meta Platforms – –91% free‑cash‑flow decline, shares down.
• ASX Technology – WiseTech +6.7%, Xero +1.4%.

Volume on U.S. Exchanges was heavy, with 18.0 billion shares changing hands, a touch above the 20‑session average of 17.2 billion. The market’s breadth was strong: advancing stocks outnumbered decliners by a 2.2‑to‑1 ratio, according to Reuters data.

The surge in Microsoft also set the stage for upcoming earnings reports. Amazon and Apple were due to release results after the market closed, and analysts were watching whether their own AI‑spending trajectories would echo Microsoft’s more measured approach. The technology rally, however, did not extend uniformly; Apple slipped 1.4% even as it recently overtook Nvidia to become the world’s most valuable company, according to the Aol report.

What to watch next

Event	Scheduled for	Potential market impact
Amazon earnings release	after Thursday close	Tests whether AI‑related capex can be balanced with cash flow.
Apple earnings release	after Thursday close	Will gauge the market’s appetite for a company that has avoided heavy AI spend.
Federal Reserve September meeting	forecasted probability of a rate hike now at 59% (CME FedWatch)	Rate‑path expectations will shape equity risk sentiment.
Middle‑East developments	ongoing	Inflation risk to commodities could revive pressure on gold and other safe‑haven assets.

For a broader view of how today’s moves fit into the ongoing market story, see the Business coverage hub, and follow the evolving picture of Wall Street stocks and crude oil as geopolitical tensions ebb and flow.