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Investors had hoped for a broad rally in big tech stocks, but Amazon’s disappointing guidance and a lukewarm response to Apple’s earnings show the market is becoming more selective. Meta, Microsoft, and Nvidia are pulling ahead, while Amazon, Apple, Google and Tesla lag behind.

“Just as it looked as if investors were ready to go all-in on big tech again, Amazon has come along and spoiled the party. A negative reaction to its results and a lacklustre response to Apple’s numbers would suggest the market has become more discerning,” said Dan Coatsworth, an investment analyst at AJ Bell.

This comes as Amazon posted higher fiscal second-quarter profit and sales than in the same period last year, underscoring the online giant’s resilience despite tariff uncertainty.

Still, its shares fell more than 7% in pre-market trading as the company’s operating income estimates for the current quarter were below analysts’ expectations. The company reported 17.5% growth for Amazon Web Services, its prominent cloud computing arm.

Meanwhile, Apple shook off US tariffs and a botched entry into artificial intelligence to accelerate its revenue growth during its springtime quarter, but the trendsetting tech company still faces a bumpy road ahead that could lead to higher iPhone prices.

The April-June results released on Thursday came against a backdrop of adversity that has been raising worries about their ability to absorb a setback of nearly $2 billion from the tariffs that President Donald Trump has already imposed and others in the pipeline.

“It’s not a straight winners and losers’ situation. Instead, it’s the emergence of a tiered ranking system,” said Coatsworth.

“Professional stock pickers are no longer loading up on all the big tech names. Instead, they’re giving prominence to fewer players as they recognise that certain names have strategic advantages. Early indications suggest Meta and Microsoft are fund manager favourites, with Nvidia close behind.”

Tariffs take their toll on Amazon and Apple

Trump’s trade war and Apple’s stumbling start in the pivotal transition to AI is causing investors to question if the company will remain at the tech forefront as the industry moves into a new era.

Before the release of Thursday’s report, Apple’s stock price had dropped by 17% so far this year to wipe out more than €525bn in shareholder wealth, costing Apple its title as the world’s most valuable company.

Even though Apple remains highly profitable, the tariffs that Trump has already imposed on China and other countries cost the company $800 million or about €701mn during the past quarter, and CEO Tim Cook told analysts during a conference call that the fees would exact an additional toll of $1.1bn or about €964mn during the July-September period. The company also predicted its revenue for July-September period would increase at a slightly slower pace than the past quarter.

“Most iPhones sold in the US originate from India, which means Apple is in the firing line for tariffs,” Coatsworth highlights. “These phones are not cheap in the first place, but they could become even pricier if the tariffs are passed on to the end user. That puts a big question mark over future demand rates and gives investors something to keep worrying about.”

Amazon has tried to beat the ticking tariff clock by bringing in foreign goods before Trump’s tariffs took effect. Amazon, like many other big retailers, also has the clout to negotiate prices with its suppliers.

CEO Andy Jassy told investors that while there’s lots of noise about the impact of tariffs on retail prices and consumption, he said “it’s impossible to know what will happen”. That’s because, in part, no one knows where tariffs will finally settle, especially in China, he said.

“If costs end up being higher, we will absorb them, but what we can share is what we’ve seen thus far, through the first half of the year, we haven’t yet seen diminishing demand nor prices meaningfully appreciating,” he said.

Coatsworth is less optimistic about investors sharing Amazon’s confidence in the resilience of their retail business, highlighting that it is “caught up in Trump’s spiderweb of tariffs, which creates ongoing uncertainty”.

He continued: “The retail business looked resilient in the past quarter, yet there is a fear among investors that sales might have benefited from Amazon encouraging suppliers to stock up on goods in the US before new tariffs came into power, which should have kept a lid on prices.”

“Once stocks are run down, the next wave of goods could become more expensive if tariffs are passed onto the customer,” he concluded.