Stocks opened higher Friday as Amazon.com’s (AMZN) impressive results helped ease concerns that big spending on artificial intelligence (AI) isn’t bearing fruit. Today’s gains had all three main indexes closing out the historically volatile month of October with impressive returns.
At the close, the blue-chip Dow Jones Industrial Average was up 0.09% at 47,562, the broader S&P 500 was 0.3% higher at 6,840, and the tech-heavy Nasdaq Composite had added 0.6% to 23,724. For the month, the benchmarks rose between 2.5% and 5%.
Amazon helped boost all three indexes, climbing 9.6% after its third-quarter results. The e-commerce giant beat on both the top and bottom lines and said revenue in its Amazon Web Services cloud segment was up 20% year over year.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more – straight to your e-mail.
Profit and prosper with the best of expert advice – straight to your e-mail.
“We continue to see strong momentum and growth across Amazon as AI drives meaningful improvements in every corner of our business,” said Amazon CEO Andy Jassy in the earnings release. “AWS is growing at a pace we haven’t seen since 2022.”
The company also raised its full-year capital expenditures forecast – to $125 billion from $118 billion – and Chief Financial Officer Brian Olsavsky expects spending to be even higher next year.
“We’ll continue to make significant investments, especially in AI, as we believe it to be a massive opportunity with the potential for strong returns on invested capital over the long term,” said Olsavsky on the earnings call.
Apple edges higher after earnings
Apple (AAPL) bounced between positive and negative territory in Friday’s session, eventually closing down 0.4%.
Late Thursday, the tech giant reported higher-than-expected fiscal fourth-quarter earnings and revenue. It also gave a strong revenue forecast for its fiscal first quarter.
But Wall Street seemed a little worried about softer-than-expected iPhone revenue and weak sales in China.
“Tariffs continue to remain a headwind to margins,” says Wedbush analyst Daniel Ives, although he notes that the majority of iPhones being sold in the U.S. are now produced in India, “given the complex Trump tariff backdrop.”
Ives reiterated his Outperform (Buy) rating on the blue chip stock and raised his price target to $320 from $310 – representing implied upside of more than 18% to current levels – on “increased confidence in the Apple growth story as the iPhone 17 launch is off to a great start heading into the key holiday December quarter in the U.S. and China.”
Exxon hikes its dividend for a 43rd straight time
Over in the energy sector, Exxon Mobil (XOM, -0.3%) reported third-quarter earnings of $1.88 per share on revenue of $3.4 billion, beating analysts’ estimates even as oil prices slumped more than 4% over the three-month period.
“We delivered the highest earnings per share we’ve had compared to other quarters in a similar oil-price environment,” said Exxon CEO Darren Woods in the earnings release. “In Guyana, we broke records with quarterly production surpassing 700,000 barrels per day,” and “we also set another production record of nearly 1.7 million oil-equivalent barrels per day [in the Permian basin].”
Exxon also hiked its quarterly dividend by 4% to $1.03 per share, marking the 43rd straight year its raised its payout.
Why is this important to investors?
“Shares in companies that raise their payouts like clockwork decade after decade can produce superior total returns (price change plus dividends) over the long run, even if they sport apparently ho-hum yields to begin with,” writes Kiplinger contributor Dan Burrows in his feature “Best Dividend Stocks to Buy for Dependable Dividend Growth.”
Case in point: Over the past 12 months, XOM is down 1.9% on a price basis, but when you add in the dividend, its total return is +2%.
Netflix splits its stock
In non-earnings news, Netflix (NFLX) jumped 2.7% after the streaming giant announced a 10-for-1 stock split. This marks the third stock split for Netflix: a 2-for-1 split on February 11, 2004, then a 7-for-1 on July 14, 2015.
“The purpose of the stock split is to reset the market price of the Company’s common stock to a range that will be more accessible to employees who participate in the Company’s stock option program,” Netflix said in its press release.
The split won’t change anything about the company’s fundamentals or market valuation. Rather, it’s similar to making change. In NFLX’s case, it will be equivalent to breaking a $10 bill into 10 $1 bills.
Based on NFLX’s October 31 close at $1,118.86, the 10-for-1 stock split will bring the share price to about $112.
