(Updates with market close)

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

spending

* Apple ( AAPL ) slides as supply snags cloud outlook

* S&P 500 quarterly earnings expected to jump 48%

By Noel Randewich and Johann M Cherian

July 31 (Reuters) - Wall Street ended higher 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 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 gained, but it remains down over

20% from its June 22 record high close.

Apple ( AAPL ) tumbled 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, despite gains in other tech stocks.

Microsoft ( MSFT ) added to gains after surging over 15% on Thursday in

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

stronger-than-expected cloud growth.

Monolithic Power Systems ( MPWR ) rose after forecasting

third-quarter revenue above estimates.

According to preliminary data, the S&P 500 gained

51.89 points, or 0.70%, to end at 7,489.52 points, while the

Nasdaq Composite gained 254.52 points, or 1.01%, to

25,376.69. The Dow Jones Industrial Average rose 280.77

points, or 0.54%, to 52,488.83.

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 ) dropped after narrowing its

annual revenue forecast.