Big US tech companies post better than expected earnings

Wall Street posted strong gains today (October 23rd), lifted by strong earnings from US tech giants. The Dow Jones Industrial Average jumped 1.87 per cent to 17,489.16, the S&P 500 rose 1.66 per cent to 2,052.51 and the tech-rich Nasdaq Composite Index soared 1.65 per cent to 4,920.05. Shares of Amazon, Alphabet and Microsoft all jumped at least nine per cent in extended trading on strong results.

"It’s great news to have these gorillas beat estimates, anytime you have Google, Microsoft and Amazon up it will balance out some of the weaker and more lackluster numbers recently," Vincent Delisle, portfolio strategist at Scotia Capital, told Bloomberg. "The market wants to feel good and it’s a cherry on top with these trademark companies beating estimates."

E-commerce giant Amazon recorded a better-than-expected profit for the second quarter in a row, boosted by higher sales in North America. It posted a profit of $79 million (£51 million) for the third quarter, or 17 cents per share, compared with a loss of $437 million, or 95 cents per share, a year ago.

Total net sales jumped 23.2 per cent to $25.36 billion. Analysts had expected a loss of 13 cents per share on revenue of $24.91 billion, according to Thomson Reuters.

Chief financial officer Brian Olsavsky said that the company would continue to invest in areas that work with customers, while looking for ways to cut costs.

Meanwhile Alphabet, Google's new parent company, posted profits up almost 50 per cent in Q3. Net income reached $3.98 billion, up from $2.74bn for the same quarter last year, and revenue was $18.7 billion, against $16.5 billion a year earlier. It said growth was mainly coming from mobile searches and YouTube users.

In addition, Microsoft unveiled fiscal-first-quarter results that beat Wall Street estimates. The software giant reported 57 cents a share in earnings, up from 54 cents a year ago. 

However, revenue was off 12.1 per cent to $20.4 billion due to lower revenue from sales of its Windows operating system and the effects of a strong dollar.

Microsoft said the better-than-expected results were due to the popularity of its new Windows 10 operating system, which is now running on 110 million devices. Commercial cloud annualised revenue run rate also exceeded $8.2 billion.