Microsoft and Alphabet Earnings Results Bode Well for Tech Sector

Concern that an economic slowdown would lead to shrinking earnings from U.S. mega-cap technology stocks eased late Tuesday when Microsoft (MSFT) and Alphabet (GOOGL) reported better-than-expected quarterly profits and revenue.  Those two earnings results were the first of the major technology and internet stocks to report this earnings season, and they helped to ease concerns that the recent rally in technology stocks was overdone. 

The Nasdaq 100 Stock Index is up +16% this year, even after Tuesday’s sharp -1.9% fall, the biggest one-day decline in two months.  Most of the Nasdaq’s gains this year have come on the back of the mega-cap technology stocks.  Microsoft is up +15% this year, and Alphabet is up almost +18%.  Tuesday’s earnings results from Alphabet and Microsoft bode well for the earnings of other mega-cap tech stocks that have yet to report.