Can the next round of tech stock rally be triggered? It still depends on Apple and Amazon's financial reports?

According to the Zhitong Finance and Economics APP, as the Nasdaq 100 index has experienced the most volatile trading days of the year recently, the financial reports of Apple (AAPL.US) and Amazon (AMZN.US) are expected to have a crucial impact on the future trend of the index.

Prior to Nvidia's (NVDA.US) performance announcement at the end of August, Apple and Amazon are the last two large companies to release financial reports among the "Big Seven," setting the tone for the tech sector in the next month. The financial reports of these two companies will be released after the U.S. stock market closes on Thursday, when investors will carefully study how artificial intelligence is driving growth in Amazon's cloud computing division and how this new technology will boost demand for the next generation of iPhones. In addition, these two companies will also provide information on the health of consumer spending to investors.

For Apple, the company is under pressure to provide more information about the expected demand for its next-generation iPhone with artificial intelligence. Since the company introduced long-awaited new artificial intelligence features in June, its stock price has risen by 15%, accumulating a 28% increase since exceeding expectations in the previous quarter, even after the recent sector rotation. Amazon's stock price has risen by 23% so far this year.

Zacks Investment Management's client portfolio manager Brian Mulberry stated that after experiencing these gains, "if people want to continue rebalancing their portfolios and taking profits, the downside momentum in the market could be greater." He said that any signs of weakness, especially forecasts from the two companies, could be punished by investors.

Some analysts believe that Apple's views on future iPhone sales and artificial intelligence will be more important than this quarter's data.

Analysts led by Amit Daryanani of Evercore ISI wrote, "We expect comments on the iPhone to be a key catalyst this quarter, with optimistic expectations for the iPhone 16 and continued stability in the Chinese market likely to drive stock prices higher." They added that new artificial intelligence features, coupled with a "fairly large portion" of iPhone users preparing to upgrade their devices, should trigger a demand cycle from the current quarter to 2025.

Analysts expect Apple's revenue for this quarter to reach $84.5 billion, an increase of about 3% compared to the same period last year, recovering from a decline in the previous quarter.

Artificial intelligence is also expected to be at the forefront and center of Amazon. Amazon is the last mega-scale data center company to report its performance, with Microsoft (MSFT.US) reporting a slowdown in growth in its Azure division. Amazon's AWS is expected to generate sales of nearly $26 billion this quarter, an increase of over 17% year-on-year. Amazon's overall revenue for the second quarter is expected to grow by 11% to reach $148.8 billion Citigroup analysts led by Ronald Josey wrote in a report: "Considering the favorable factors brought by generative artificial intelligence, we believe that AWS's revenue growth may accelerate in the second quarter." They also expect that, due to the improvement in retail efficiency and strong advertising demand, operating profit will exceed expectations.

Amazon's performance will also be seen by the market as a gauge of the strength of U.S. consumer spending.

Matt Stucky, Chief Equity Portfolio Manager at Northwestern Mutual Wealth Management, said: "We have heard many reports of mixed consumer performance this earnings season." McDonald's (MCD.US) reported this week that its sales fell for the first time in four years due to fewer diners, while Starbucks (SBUX.US) also saw a decline in same-store sales.

Stucky added that over the past year and a half, the expansion of retail business profit margins has been a key driver of Amazon's profitability and stock price. He stated that the business's role in driving Amazon's sustained profitability, even if it does not surpass the influence of artificial intelligence in the AWS field, is not far behind.

The market generally expects the operating profit margin of the North American business in the second quarter to reach around 5.8%, a significant increase from the previous year, and to continue to grow for the rest of the year (excluding AWS, which has a much higher operating profit margin).

Truist analyst Youssef Squali also pointed out that the strength of Amazon's retail business and AWS are the focus of this earnings report.

"In a soft consumer environment, Amazon continues to gain market share in the global e-commerce market and improve its value proposition to merchants and consumers," Squali wrote in the report, reiterating his "buy" rating. "We see multiple growth vectors driving Amazon's growth, which keeps the stock attractive."

Finally, any changes in capital returns could also drive the stock price higher. With cash reserves expected to exceed $100 billion this year, Amazon is in a favorable position to join other large tech peers in returning capital to shareholders