Tech ETFs Rally After Upbeat Alphabet, Microsoft Quarterly Results | ETF Trends

Technology-related exchange traded funds climbed Wednesday after Google’s parent Alphabet (NasdaqGS: GOOGL) and Microsoft (NasdaqGS: MSFT) quarterly earnings allayed fears of a slowdown.

On Wednesday, the tech-heavy Invesco QQQ Trust (QQQ) rose 2.7%, the Technology Select Sector SPDR Fund (XLK) gained 2.7%, and the Communication Services Select Sector SPDR Fund (XLC) increased 3.1%.

Meanwhile, Alphabet shares were up 6.6% and Microsoft shares were 4.7% higher. GOOGL makes up 3.4% of QQQ’s underlying holdings and 11.0% of XLC. MSFT makes up 10.2% of QQQ and 22.2% of XLK.

Alphabet Inc.’s results, notably from Google search, beat expectations.

“In the second quarter, our performance was driven by Search and Cloud. The investments we’ve made over the years in AI and computing are helping to make our services particularly valuable for consumers, and highly effective for businesses of all sizes. As we sharpen our focus, we’ll continue to invest responsibly in deep computer science for the long-term,” Sundar Pichai, CEO of Alphabet and Google, said in a note.

Alphabet’s Google search ad revenue came in stronger-than-expected, assuaging fears of a slowdown in online advertisement and concerns that the internet industry could weaken alongside the global economy in face of a recession.

“Despite the underwhelming quarter, expectations were so low that investors blew a sigh of relief,” Jesse Cohen, senior analyst at, told Reuters.

Meanwhile, Microsoft Corp provided an upbeat fiscal year outlook, projecting a double-digit expansion in revenue due to increased demand for cloud computing.

“We see real opportunity to help every customer in every industry use digital technology to overcome today’s challenges and emerge stronger,” Satya Nadella, chairman and chief executive officer of Microsoft, said in a note. “No company is better positioned than Microsoft to help organizations deliver on their digital imperative – so they can do more with less.”

“In a dynamic environment, we saw strong demand, took a share, and increased customer commitment to our cloud platform. Commercial bookings grew 25% and Microsoft Cloud revenue was $25 billion, up 28% year over year,” Amy Hood, executive vice president and chief financial officer of Microsoft, said in the same note. “As we begin a new fiscal year, we remain committed to balancing operational discipline with continued investments in key strategic areas to drive future growth.”

Microsoft’s cloud computing business has enjoyed increased demand due to a shift in the way corporate America is conducting business in the new digital age.

“I don’t think it’s unique to Microsoft,” Bob O’Donnell, an analyst for TECHnalysis Research, told Reuters. “Microsoft is extraordinarily well positioned because of the range of businesses it has and the critical role their software and computing services play for organizations.”

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