Google parent Alphabet Inc, Microsoft Corp and Amazon.com Inc made headway in the latest quarter in the areas that will be their main engines of growth for years to come, driving up shares across the tech sector on Friday.
Shares of all three surged in early trading, adding more than $ 120 billion to their combined market value – more than the gross domestic product of Morocco.
For Alphabet, search traffic on mobiles surpassed desktop traffic worldwide for the first time, while Amazon was able to boost margins, an area of concern, as its cloud business boomed.
Microsoft’s growing emphasis on cloud computing under Chief Executive Satya Nadella also put the company on track successfully transition away from its slowing business that relies on sales of personal computers.
Alphabet’s shares jumped 10.5 percent to a record high of $ 752.50 in early trading, adding about $ 50 billion to its market value. This gave Alphabet a market cap of about $ 522.5 billion, cementing its position as the second-most valuable stock after Apple Inc, which is worth about $ 660 billion.
Microsoft’s shares jumped 11.6 percent to $ 53.61 – their highest in 15 years – while Amazon surged as much as 10 percent to $ 619.45, also a record high. The tech-heavy Nasdaq composite index was up about 1.8 percent.
“I think what you’re seeing is these companies finally able to address the primary challenges that have been facing the businesses,” said James Cakmak, an analyst at brokerage Monness, Crespi, Hardt & Co in New York.
“For Amazon it’s margin, for Alphabet it’s mobile, for Microsoft it’s the cloud or diversifying away from its legacy businesses.”
The better-than-expected results are a bright spot for the market following a period of intense volatility over worries about China and the timing of a U.S. interest rate hike.
Before the start of the third-quarter reporting season, corporate earnings had been expected to fall by 4.1 percent, according to Thomson Reuters data.
The three companies’ results show that a key part of the U.S. economy continues to function well even as the global economy slows, said Adam Sarhan, chief executive of investment advisory firm Sarhan Capital in New York.