Tech Stocks Rally Late Afternoon: What's Driving This Bull Run?

The tech sector surged in the late afternoon trading session on May 2, 2025, with stocks like Microsoft and Meta Platforms leading the charge. Investors are piling into tech giants after a perfect storm of strong earnings, trade policy optimism, and renewed faith in AI-driven growth. Let’s break down why this rally is happening—and why it might be just the start.

1. Microsoft: The Cloud Engine Roars

Microsoft’s fiscal third-quarter results were a masterclass in outperformance. The company reported revenue of $73.15–74.25 billion, blowing past analyst estimates of $72.26 billion. Azure cloud revenue grew 34%–35% year-over-year at constant currency—a blistering pace that’s fueling Wall Street’s love affair with enterprise tech. With net income up 18% to $25.8 billion, Microsoft isn’t just surviving—it’s thriving in a world where cloud infrastructure is king.

This isn’t just about numbers. Azure’s growth is a direct rebuttal to fears that President Trump’s trade tariffs could strangle tech spending. Investors are betting that Microsoft’s scale and global reach will keep it ahead of the curve, no matter the geopolitical noise.

2. Meta: The Ad-Driven Comeback

Meta Platforms (formerly Facebook) proved that not all tech giants are struggling. The company delivered first-quarter revenue of $42.5 billion, a 16% year-over-year jump, with net income soaring 35% to $16.64 billion. While ad spending from Asian e-commerce firms dipped slightly, Meta’s investments in AI tools like its Llama series and its metaverse initiatives are positioning it as a leader in the next wave of digital innovation.

Investors are buying into the narrative that Meta’s diversified revenue streams—advertising, VR, and AI—are resilient to trade headwinds. The stock’s 4%–5% surge in after-hours trading tells the story: this isn’t a fluke—it’s a shift.

3. Trade Tensions: A Pause in the Tariff War?

The U.S.-China trade saga took a turn when Chinese state media reported that Beijing had engaged in “backchannel outreach” to discuss tariff de-escalation. This news sent a clear signal: the trade war’s volatility might be easing. Tech stocks, which rely on global supply chains, breathed a sigh of relief.

UBS’s Solita Marcelli summed it up: “The sharpest policy swings are likely behind us.” While tariffs aren’t gone, the market is pricing in a “less bad” scenario. For companies like Apple and Broadcom—whose supply chains span the Pacific—this is a game-changer.

4. GDP? Investors Are Looking Past It

The U.S. economy contracted 0.3% in Q1 2025, the first such drop since 2022. But traders shrugged it off, focusing instead on corporate earnings strength. The Nasdaq surged 1.5%, while the S&P 500 clawed back from a 2% intraday loss.

Why the disconnect? Investors are betting that earnings—not GDP—are the real indicator of tech’s health. Azure’s 34% cloud growth? That’s real money. Meta’s AI-driven ad revenue? That’s future-proofing. In a world where growth is scarce, tech’s fundamentals are winning.

5. AI and Cloud: The New Growth Engine

The rally isn’t random—it’s a vote of confidence in AI and cloud computing. Microsoft’s Azure and Meta’s AI tools are just the tip of the iceberg. Analysts estimate the global cloud market will hit $800 billion by 2028, and investors are pouring cash into companies positioned to dominate it.

This isn’t just hype. Amazon’s stumble (a 3% dip after missing earnings) highlights the stakes: companies that adapt to AI/cloud trends win; those that don’t… well, they’re getting left behind.

Conclusion: Tech’s Time to Shine

The May 2 surge isn’t a flash in the pan—it’s a sign of tech’s resilience. Microsoft and Meta delivered the goods, trade tensions eased just enough, and investors are doubling down on AI-driven growth. Here’s why this rally could last:

• Earnings Power: Microsoft’s Azure is growing faster than any cloud competitor. Meta’s ad revenue shows that digital platforms still rule.
• Trade Truce: Even a partial thaw in U.S.-China tensions reduces the risk of supply chain chaos.
• AI Momentum: The Nasdaq’s 1.5% jump isn’t random—it’s a bet on the next tech revolution.

If you’re on the sidelines, this is the time to jump in. Microsoft and Meta are leading, but don’t ignore cloud plays like Amazon (once it gets its act together) or chipmakers like AMD, which are exempt from China’s retaliatory tariffs.

The message is clear: tech’s back, and it’s here to stay.

Data as of May 2, 2025. Past performance does not guarantee future results.