Key Takeaways
- Amazon (AMZN) and Snowflake (SNOW) signed a massive $6 billion deal over five years for the use of AWS Graviton processors, highlighting the surging demand for custom AI and cloud infrastructure.
- Salesforce (CRM) outperformed Q1 expectations with an adjusted EPS of $3.88 on $11.13 billion in revenue, though its Q2 revenue guidance came in slightly below analyst estimates.
- Federal Reserve Governor Cook signaled a hawkish stance, stating the central bank is prepared to raise interest rates if inflation fails to cool, while warning that AI-driven job losses could precede productivity gains.
- Geopolitical tensions involving Iran and the Strait of Hormuz kept investors cautious, leading to a flat close for the S&P 500 despite continued optimism in AI-driven growth.
- Major U.S. indices finished mixed as the Dow Jones Industrial Average gained nearly 200 points, while the Nasdaq and S&P 500 saw only marginal gains.
Tech Giants Forge $6 Billion Infrastructure Partnership
Amazon (AMZN) has secured one of its largest CPU computing agreements to date, striking a $6 billion deal with Snowflake (SNOW). Under the five-year agreement, Snowflake will utilize AWS Graviton chips within Amazon’s data centers to power its cloud-based data services.
This partnership underscores the accelerating shift toward custom silicon and agentic computing infrastructure. Snowflake joins other tech titans like Meta (META) and Apple (AAPL) as major adopters of Amazon’s proprietary Graviton processors, which are designed to offer better price-performance for cloud workloads compared to traditional x86 chips.
Salesforce Beats Earnings Targets Amid Mixed Guidance
Salesforce (CRM) reported strong first-quarter results for fiscal 2027, posting adjusted EPS of $3.88, significantly beating the consensus estimate of $3.13. The company’s revenue reached $11.13 billion, surpassing the $11.05 billion expected by Wall Street, while adjusted operating income hit $3.87 billion.
Despite the Q1 beat, the company provided a cautious outlook for the second quarter. Salesforce projects Q2 revenue between $11.27 billion and $11.35 billion, slightly trailing the $11.36 billion analyst estimate. The company expects adjusted EPS for the upcoming quarter to land between $3.25 and $3.27.
Fed Governor Cook Warns of Persistent Inflation Risks
Federal Reserve Governor Lisa Cook delivered a cautious message on Wednesday, stating that the "right course of action" is to hold interest rates steady as inflation risks remain tilted to the upside. Cook emphasized that the Fed is prepared to lift rates further if disinflation stalls, though she noted the central bank would also be ready to cut if the labor market shows signs of significant deterioration.
In a notable comment on the evolving economy, Cook warned that AI-driven job losses could manifest before the technology delivers broader productivity gains. This hawkish tone contributed to a stall in the recent stock market rally, as investors weighed the possibility of "higher for longer" borrowing costs.
Geopolitical Uncertainty Weighs on Market Sentiment
Market momentum was further tempered by mixed signals regarding U.S.-Iran negotiations. Former President Trump expressed dissatisfaction with current talks and rejected the notion of any single nation controlling the Strait of Hormuz, a critical chokepoint for global oil transit.
Secretary of State Marco Rubio reiterated that while diplomacy remains the primary approach, the administration maintains "other options" to prevent Tehran from obtaining a nuclear weapon. These tensions caused oil prices to retreat below $89 a barrel, while the S&P 500 (SPY) closed nearly flat, adding just 0.02% to end at 7,520.80.
Corporate Highlights and Market Close
In other corporate news, JPMorgan Chase & Co. (JPM) announced it will redeem the entire $2 billion of its 3.65% fixed-rate reset non-cumulative preferred stock, Series KK. Meanwhile, Synopsys (SNPS) entered into a cooperation agreement with Elliott Management, where the activist investor agreed to cap its economic exposure in the company at 7.5%.
The Dow Jones Industrial Average (DIA) was the day's top performer, rising 196.86 points, or 0.39%, to close at 50,658.54. The Nasdaq Composite (QQQ) edged up 0.06% to 26,671.47, supported by the ongoing bet that AI-driven earnings growth will continue to underpin equity valuations despite macroeconomic headwinds.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.