Bumper profits from Google parent Alphabet and Amazon boost tech-heavy index as Jeff Bezos closes in on title of worlds richest person
A slew of large tech companies including Google parent Alphabet and Amazon have reported better than expected bumper profits, promising to boost the Nasdaq index to fresh highs.
The tech-heavy index already pushed to a new record on Thursday of 6,048.94, a rise of 0.39%, thanks to strong results from PayPal and Comcast. But after-the-bell figures from the industrys giants looked set to take it even higher when trading resumes on Friday.
With shares already buoyant on the hopes of huge corporate tax cuts by the Trump administration, the impressive earnings helped Wall Street brush aside any concerns about a possible US government shutdown amid continued congressional wrangling.
Most folks were expecting a build in earnings acceleration and thats what weve got, said Michael Arone, chief investment strategist at State Street Global Advisors in Boston. Despite all the economic and geopolitical noise, ultimately the market has been responding to improving earnings.
The record-breaking run is likely to continue next week when the market will hear from Apple and Facebook.
Alphabets profit beat Wall Street estimates and rose 29% to $5.43bn, a performance that analysts called exceptional for a company so large.
For a company of Googles size to post the growth that it has is just a testament to the quality and usefulness of the products they make, said Colin Gillis, an analyst with BGC Partners. They are the dominant force in digital advertising.
Shares of the company rose 2.8% to $916.80 after the bell on Thursday.
Like its arch-rival Facebook, Google has aggressively shifted the focus of its business to mobile advertising. The two companies accounted for 99% of the industry growth in digital advertising in 2016, Pivotal Research said in a report this week, demonstrating market power that some advertisers complain amounts to a duopoly.
Amazon, the worlds largest online retailer, saw its shares rise to their highest ever level after it said net income rose 41% in the first quarter of the year.
Retail and cloud-computing sales led the way, boosted by fees from its Prime shopping club and media streaming services, along with growing advertising revenue.
Shares rose 3.9% to $954 in after-hours trading, adding nearly $3bn to the personal fortune of founder and chief executive Jeff Bezos.
His wealth is now estimated at $79bn, making him the worlds third richest person ahead of Warren Buffett on $74bn, according to Bloomberg. Bezos is $8.3bn behind Bill Gates, the Microsoft founder who is in top spot with a fortune put at $87.3bn.
PayPal jumped $2.74, or 6.2 percent, to $47.15 after reporting stronger revenue and earnings than Wall Street had forecast while Comcast was boosted by stronger revenue at theme parks it acquired as part of its NBCUniversal purchase.
Microsoft profits disappointed investors as sales of its Surface tablets and laptops slumped and earnings came in lower than expected. But income was still a healthy 28% up in the first three months of the year.
Intel, the chipmaker, saw profits rise by 45% to $2.9bn.