What happened
It seemed like Amazon (AMZN -1.11%) was the one major cloud computing stock that didn't participate in the market rally Thursday that was ignited by Nvidia's earnings report. But that changed Friday: As of 1:50 p.m. ET, Amazon shares had risen by 5.2%.
So what
Thursday's rally was triggered after Nvidia shocked investors with how rapidly the push into artificial intelligence (AI) is moving. That would seemingly also be good news for Amazon Web Services (AWS), as the AI trend should drive higher demand for its computing power and cloud storage offerings. Investors seem to be recognizing that a day late. During the session, Amazon stock hit its highest level in 2023.
Now what
Nvidia also blew past analysts' expectations for quarterly revenue and with its guidance for how much it expects sales to accelerate due to the move to include its AI offerings in consumer and enterprise use cases. In the company's earnings conference call, management mentioned surging demand from several well-known tech companies, but the names mentioned didn't include Amazon.
Also Thursday, data cloud company Snowflake disappointed investors with its full-year revenue guidance, saying its customers seem to be scaling back their use of cloud storage as a cost-cutting measure. Management seemed to think that some companies are changing policies and choosing to save less historical data to minimize their data-retention costs. That could cut into the need for computing power to analyze data, which could be bad for Amazon Web Services.
But some investors Friday appear to be looking more at the bigger picture associated with the advancement of AI. The additional computing power that will be needed for growing AI usage should benefit AWS in the long run -- and that realization is now being reflected in Amazon's stock price.
