Technology stocks and related ETFs jumped Friday after Alphabet (NasdaqGS: GOOGL), Amazon (NasdaqGS: AMZN), Microsoft (NasdaqGS: MSFT) and Intel (NasdaqGS: INTC) third quarter results impressed traders.
The Technology Select Sector SPDR (NYSEArca: XLK), the largest technology ETF by assets, rose 2.6% and the PowerShares QQQ (NasdaqGM: QQQ), which tracks the tech heavy Nasdaq-100 Index, increased 2.8% on Friday.
Google’s parent company Alphabet revealed late Thursday that profits sharply rose in the third quarter while Amazon said revenue hit a record, Microsoft shares gained as its cloud-computing operations bolstered revenue and Intel strengthened after lifting its guidance, the Wall Street Journal reports.
Consequently, GOOGL shares were 5.4% higher Friday while AMZN was up 12.9%, MSFT advanced 7.0% and INTC increased 7.6%. Furthermore, both Alphabet and Amazon stocks broke above $1,000 per share.
XLK includes a 14.4% tilt toward AAPL, 10.7% to MSFT, 5.2% to GOOGL, 5.2% to GOOG and 3.4% to INTC. QQQ includes AAPL 11.8%, MSFT 8.9%, AMZN 6.7%, GOOG 4.9% and GOOGL 4.3%.
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Some observers are concerned about the pricey valuations in the growth sector as the tech segment has been among the best performers this year. Strong earnings, though, may help support the higher prices.
“Valuations across the board may be frothy, but I think there are plenty of companies who can justify their valuations,” Jon Mackay, investment strategist at Schroders, told the WSJ, adding the tech sector is large, and there are plenty of high-performing hardware companies as well as those known for their innovative products.
“In many ways, we’re seeing the strong getting stronger,” Eric Wiegand, senior portfolio manager at the Private Client Reserve at U.S. Bank, told Reuters. “While valuations are full, it certainly becomes imperative on them to deliver solid operating results and that’s something that we did see.”
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