(Updates with afternoon trading)

* Amazon ( AMZN ) jumps as AWS growth soothes fears over rising AI

spending

* Apple ( AAPL ) slides as supply snags cloud outlook

* S&P 500 +0.60%, Nasdaq +0.83%, Dow +0.54%

By Noel Randewich and Johann M Cherian

July 31 (Reuters) - Wall Street climbed on Friday, lifted by

Amazon ( AMZN ) as the tech heavyweight's strong quarterly report

bolstered investor confidence in AI-related stocks, while Apple ( AAPL )

dropped after its results disappointed investors.

Amazon.com ( AMZN ) surged 15% after posting its biggest

quarterly revenue growth in over four years. Its results, along

with a similar report from Microsoft ( MSFT ) on Wednesday,

alleviated investor concerns about potential overspending on AI

data centers.

Worries that heavy investments in AI infrastructure may be

taking too long to pay off rattled global markets this month and

led to doubts about companies at the center of Wall Street's

rally in recent years.

"There were worries that Amazon's ( AMZN ) spending was just moonshot

spending, that it's irresponsible spending, and (CEO) Andy Jassy

just put those fears to bed," said Jake Dollarhide, CEO of

Longbow Asset Management in Tulsa, Oklahoma.

The PHLX chip index added 1.3%, but it remains down

over 20% from its June 22 record high close.

Apple ( AAPL ) dropped 9.6% after warning that supply

constraints would hurt growth, adding to worries that recent

iPhone price hikes would weaken consumer demand.

Apple's ( AAPL ) slump kept the S&P 500 technology index

down 0.9%, despite gains in other tech stocks.

Microsoft ( MSFT ) climbed 2.1%. The company on Thursday surged over 15%

in its biggest one-day percentage gain since 2008 after it

forecast stronger-than-expected cloud growth.

Monolithic Power Systems ( MPWR ) gained 8.5% after forecasting

third-quarter revenue above estimates.

The S&P 500 was up 0.60% at 7,482.42 points. Even as the S&P

500 climbed, declining stocks outnumbered rising ones

by a 1.1-to-one ratio.

The Nasdaq gained 0.83% to 25,331.65 points, while the Dow

Jones Industrial Average was up 0.54% at 52,492.51 points.

SpaceX dipped 3% to $107.82 and was on track for

the lowest close since its blockbuster initial public offering

in June, when it was priced at $135 a share.

Analysts on average expect S&P 500 aggregate second-quarter

earnings to soar 48% from a year ago, with AI-related stocks

accounting for much of that growth, according to LSEG I/B/E/S.

Strong earnings forecasts and a recent decline in share

prices have left the S&P 500 trading at about 20 times expected

earnings, just above its 10-year average of 19 times, according

to LSEG data.

The S&P 500 is near flat in July while the Nasdaq has fallen

about 3%. Both indexes are up about 9% in 2026.

The S&P 500 equal-weighted index was on track for

its fourth straight month of gains, thanks to its limited

exposure to heavyweight AI-related stocks that have

underperformed for much of that time.

Three Federal Reserve officials who dissented at the Fed's

policy meeting this week in favor of an interest rate hike

called on Friday for immediate action to bring inflation down to

the U.S. central bank's 2% target.

The 2-year U.S. Treasury yield, which typically

moves in step with interest rate expectations for the Fed, rose

5.4 basis points to 4.28% but is down slightly for the week.

Markets are pricing in a 65% chance of a rate hike at the Fed's

September meeting, according to CME FedWatch, down from 82% a

week ago but up slightly from 63% on Thursday.

Domain registrar GoDaddy ( GDDY ) lost 19% after narrowing its

annual revenue forecast.

The S&P 500 posted four new highs and three new lows; the

Nasdaq recorded 37 new highs and 101 new lows.