The S&P 500 pushed to a fresh all-time high above 7,620, but a critical resistance zone must clear before the breakout is confirmed.
Back
S&P 500 hits record 7,620 but faces key resistance test
The S&P 500 pushed to a fresh all-time high above 7,620, but a critical resistance zone must clear before the breakout is confirmed.
The S&P 500 rose 0.61% to a record 7,620.90 on Aug. 4 after Microsoft and Amazon confirmed aggressive AI spending is translating into tangible financial returns.
"The index has room to re-rate higher while fundamentals keep improving," Goldman Sachs said in a note, forecasting the benchmark would reach 8,000 by year-end.
The Nasdaq Composite outperformed, rising 1.20% to 26,235.70, though it still faces resistance at 26,301.54 before the all-time high at 27,190.21 comes into view. Blended earnings growth for S&P 500 companies stands at 47.4%, the highest since 2021, while the index's forward price-to-earnings ratio of 19.6 sits below its five-year average of 19.98, according to FactSet data.
A sustained break above 7,620.90 would open the door to additional upside, while a failure risks a pullback toward the 7,577.92 support. The next test comes this week as more than a dozen S&P 500 companies report, including AMD, Caterpillar, Arista Networks, Eli Lilly, Walt Disney and Uber.
Technology and financial companies drove the earnings beat, with banks like Goldman Sachs, Morgan Stanley and JPMorgan posting strong numbers on higher interest rates and a pickup in deal activity. Nvidia trades at 22 times forward earnings despite its revenue growth, while Micron trades below 20 times, leaving room for further re-rating, according to FactSet data.
AI Returns Separate Microsoft From Amazon
Microsoft's Azure grew 43% last quarter, with the company guiding to 45% next quarter, while Amazon's AWS expanded 37%. Microsoft carries a $678 billion backlog against Amazon's $496 billion. Amazon plans roughly $220 billion in 2026 capital spending, ahead of Microsoft's $190 billion, yet Microsoft turned its quarter into $19.6 billion of free cash flow at a 45% operating margin. Amazon's free cash flow turned negative in the second quarter, with an outflow of $7.6 billion over the past year.
Amazon's answer is its own silicon — Trainium and Graviton chips now bring in more than $25 billion a year. Microsoft still leans more heavily on Nvidia.
Valuation Gap Favors Microsoft
Microsoft trades at 23.2 times forward earnings against Amazon's 30 times. Microsoft's market capitalization stands at $3.4 trillion with net debt of roughly $47 billion, versus Amazon's $92 billion. Amazon's price-to-sales ratio of 3.5 times sits far below Microsoft's 10 times, though that reflects Amazon's low-margin retail business.
The divergence in returns has reshaped how investors view AI capital spending. Amazon's stock climbed 15% after its earnings report, its biggest one-day gain in more than a decade, as Chief Executive Andy Jassy reframed the buildout as a long-term investment rather than an ongoing cost. Microsoft, by contrast, has largely avoided skepticism because Azure's rapid expansion already shows returns.
The rally also comes against a backdrop of easing geopolitical risk, with traders watching whether the U.S.-Iran conflict winds down later this year, a scenario that would further support equities. For now, the technical picture keeps buyers in control as long as the index holds above the 7,577.92-to-7,620.90 zone.
This article is for informational purposes only and does not constitute investment advice.
[1] A key technical resistance level to watch as S&P 500 hits an all-time high[2] Microsoft and Amazon Are Spending Billions on AI. 1 Is Getting Far Better Returns.[3] The S&P is trading at a new record high. The Nasdaq is higher but work to do technically[4] VOO and SPY: Top reasons these S&P 500 ETFs could soar even higher[5] Cramer Says Iran War Basket Trades Create Investment Opportunities, and Amazon is Reshaping Wall Street’s View of AI Spending
