The first earnings season after Trump's new term has come to an end, with significant divergence in the performance of tech giants. Microsoft has surpassed Apple to become the world's most valuable tech company, thanks to its excellent tariff resilience, strong cloud business performance, and efficient advancement of its AI strategy.In contrast, Apple and Amazon have performed poorly under the dual pressures of trade tariffs and weak consumer demand, resulting in a substantial shrinkage of their market value.<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/4d6d1c23-7836-4b00-8104-c50df6c1208d.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/4d6d1c23-7836-4b00-8104-c50df6c1208d.png"/><h2>Microsoft: AI Empowerment and Tariff Resilience Lead Tech Giants</h2>Despite a general pessimistic sentiment towards tech stocks before the earnings report was released, Microsoft delivered a strong earnings report that exceeded expectations.One of its core growth engines, Azure cloud business revenue reached an all-time high. The company attributed this to its forward-looking partnership with OpenAI and the surge in market demand for enterprise software with integrated AI capabilities.As a result, Microsoft's stock price rose approximately 11% in the week following the earnings report, making it the only company among the &#34;Mag 7&#34; (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla) to achieve cumulative positive growth in stock price this year. Notably, last year, Microsoft's stock price increased by 12.1%, lagging behind other companies in the &#34;Seven Giants.&#34; The S&amp;P 500 index rose by 23.3% in 2024.As of Friday's close, Microsoft's market value reached $3.2 trillion, surpassing Apple ($3.1 trillion) to reclaim the title of the world's most valuable company.Microsoft's ability to succeed against the trend is not only due to the strong growth of its cloud business but also its unique protective capabilities demonstrated under tariff and economic pressures. Nadella stated that Microsoft's focus on serving enterprise customers in the software business inherently provides high resilience and risk resistance:<blockquote>&#34;Software is the best resource to withstand inflation and economic slowdown pressures, enabling higher efficiency and low-cost development.&#34;</blockquote>The early strategic partnership with OpenAI also played a crucial role: through this collaboration, Microsoft does not have to bear the enormous costs of developing cutting-edge AI large language models alone while securing OpenAI as a heavyweight cloud service customer.Based on optimistic expectations for the future, Microsoft has also maintained an ambitious capital expenditure plan, confirming it will invest $80 billion in data center construction in the current fiscal year (ending June 30) and continue to increase spending in the next fiscal year. This includes several billion dollars in new projects in Europe, aimed at avoiding potential future U.S. policy risks and ensuring the security of the data and computing supply chain in the European market. The announcement of this capital expenditure plan has also boosted overall confidence in the tech sector.Looking ahead, analysts generally believe that Microsoft, relying on its AI strategy and leading position in the enterprise software sector, will continue to solidify its market advantage. Melius Technology Research Director Ben Reitzes stated that Microsoft's excellent performance in this earnings report not only stems from outstanding data in the Azure business but, more importantly, from its massive capital expenditure plan and strategic foresight, which have fully restored market confidence. Ben added:<blockquote>&#34;The market's confidence in Azure has been restored—and you can't impose tariffs on software.&#34;</blockquote>Jim Tierney, head of the U.S. Growth Fund at AllianceBernstein, also believes that Microsoft not only excels in the cloud computing sector but also has a robust overall software business, and &#34;can avoid the tariff risks that competitors like Apple and Amazon will face for a long time to come.&#34;<h2>Apple and Amazon both lose, hardware and e-commerce hit hard</h2>In stark contrast to Microsoft's strong performance, Apple and Amazon have suffered poor results due to the severe impact of the Trump administration's trade policies.Apple revealed in its earnings report that the company's additional costs have increased by at least $900 million per quarter solely due to trade tariffs. Amazon significantly lowered its future earnings guidance in its earnings report, warning that rising costs due to high tariffs and a sharp decline in consumer spending pose severe challenges to its e-commerce business. On the day the earnings report was released, the combined market value of these two companies shrank by nearly $180 billion.Analysts point out that compared to Microsoft's focus on software and cloud computing, Apple and Amazon are heavily involved in hardware manufacturing and e-commerce, making them extremely vulnerable to the high tariffs imposed by Trump. Tariffs have severely impacted Apple's iPhone manufacturing costs, as well as the pricing and sales of products on Amazon's platform, making it difficult to reverse in the short term.<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/bf11e375-8a1f-4d99-8dd4-cb29db6ab2fa.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/bf11e375-8a1f-4d99-8dd4-cb29db6ab2fa.png"/>

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With AI support and tariff resilience, Microsoft leads the tech giants

- The first earnings season of Trump's new term shows a stark performance divide among tech giants, with Microsoft surpassing Apple to become the world's largest tech company.  
- Microsoft reported strong earnings driven by its Azure cloud business and strategic partnership with OpenAI, while Apple and Amazon faced significant losses due to trade tariffs and weak consumer spending.  
- Analysts believe Microsoft's focus on software and cloud services positions it well against ongoing economic pressures, contrasting sharply with the struggles of Apple and Amazon in hardware and e-commerce.

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