Amazon and Alphabet have spread fear across a range of industries after their recent expansion into groceries, driverless cars and mobile phones. But it was their core retail and advertising business that drove an unexpected surge in earnings on Thursday, as two of Big Tech’s biggest beasts continued to profit at traditional rivals’ expense.

The “super-Thursday” set of results from many of the biggest US tech companies showed a sector in rude health, confounding doubters among investors worried about valuations and pace of growth amid the costs of aggressive expansion into new areas.

With new encouragement, investors on Wall Street sent shares in Alphabet, Amazon and Microsoft to near record highs, with the latter two also benefiting from their big bets in cloud computing.

Amazon posted its fastest sales rise in five years, boosted by its $13.7bn acquisition of Whole Foods which closed at the end of August. Excluding Whole Foods and currency impacts, the ecommerce giant still grew sales by an impressive 29 per cent, helping squeeze out a profit even as it pours money into warehouses ahead of the holidays. 

Amazon has now grown sales by more than a fifth for over two years as tightens its grip on online shopping. Even as deep-pocketed Walmart pours money into ecommerce, adding millions of products to its website and escalating a price war, Amazon’s dominance has only grown with its fourth consecutive quarter of accelerating sales growth. Emarketer, the research group, estimates that by year-end, 44 cents of every dollar spent online will go to Amazon, up from 38 cents last year. 

Amazon has continued its decade-old model of sacrificing profits in favour of heavy spending. The company matched its 34 per cent sales growth with a 35 per cent rise in expenses. Still, investors cheered the results, particularly after Amazon had warned that this was “typically a lower-income quarter”. 

In the latest sign of its ambitions, Amazon was reported on Thursday to have gained approval from a number of state pharmaceutical boards to become a wholesale distributor. Even as its stock rose sharply on the back of strong results, shares in US pharmacy chains, drug wholesalers and pharmacy benefit managers dropped.

Alphabet, Google’s parent company, also delivered an unexpectedly strong quarter for its investors. The firm increased revenue at the fastest rate since the fourth quarter of 2012, soaring 24 per cent year-on-year. Analysts at UBS called it a “clean beat” across the board for Google, as it exceeded expectations on sales and earnings per share.

Investments in intelligent mobile search and tailored products for Asian users helped the company beat expectations on both revenue and earnings. 

The company hit several milestones, with its shares rising over $1,000 in after-hours trading and its cash and marketable securities hitting $100bn, 60 per cent of which is held overseas.

However, Google’s successful switch to mobile advertising has also brought greater traffic acquisition costs. Alphabet’s capital expenditures were also substantial at $3.6bn, up from $2.8bn last quarter, even as it trimmed costs at its “Other Bets” to $77m, primarily because of a reduced investment in Fiber, its internet infrastructure business.

While the majority of Alphabet’s revenue still comes from advertising, other revenues — including cloud, the Google Play app store and hardware such as its new Pixel 2 smartphone — were up 40 per cent year-over-year to $3.4bn. 

Magnitude of Big Tech: market caps (pre-trading Friday)

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“The growing adoption of cloud for digital workloads around artificial intelligence, [internet of things] and edge computing will catalyse the next wave of market growth,” said Daniel Liu, analyst at Canalys.

Thursday’s set of tech industry earnings also showed that the four largest cloud service providers expanded their combined market share to 57 per cent, according to Canalys, as Microsoft and Intel continued to shift their businesses away from PCs and into the cloud. 

While Amazon has recently pushed into areas such as television shows and organic fruit and vegetables, cloud computing remains its most profitable business by a large margin, funding its heavy spending. Amazon Web Services’ growth of 42 per cent took revenues to $4.6bn.

Analysts said that it maintained its lead over its nearest rival, Microsoft’s Azure, where revenues rose 90 per cent.

Even so, Microsoft and Intel both outperformed Wall Street’s expectations largely by pushing more strongly into the cloud, and staving off declines in their legacy PC markets. 

Microsoft posted revenue growth of 12 per cent to $24.5bn, about $1bn more than had been predicted by analysts. Satya Nadella, chief executive, said that it had hit a $20bn annualised revenue run rate for its commercial cloud business, “outpacing the goal we set just over two years ago”. 

“The kinds of workloads now that are moving to the clouds has qualitatively changed,” Mr Nadella said. 

Microsoft’s pitch to companies of a “hybrid” approach that combines online services such as Azure and Office 365 with Windows-based software installed locally was winning over clients, he said — an area where it has a distinct advantage over its purely cloud-based rivals. 

Intel’s third-quarter sales of $16.1bn also beat expectations, owing to what it called its “data centric businesses” growing by 15 per cent. “Our transformation is accelerating,” chief executive Brian Krzanich said, as he raised revenue guidance for the full year by $700m, putting Intel on track for its second sequential year of growth after a period of decline. 

Nonetheless, the cloud remains a minority of both companies’ revenues. Intel said that 45 per cent of its sales comes from data centres, up from 30 per cent in 2012, where cloud service providers grew 24 per cent but enterprise sales declined 6 per cent. 

Microsoft said that $5bn of its first-quarter revenues came from the “commercial cloud” — up 56 per cent year-on-year and with gross margins improving by 8 percentage points to 57 per cent. While this is still only a fifth of Microsoft’s total revenues, analysts say that the Windows developer is making progress. 

“Microsoft and Intel are both successfully adapting their businesses to be relevant not only in cloud, but wherever data is being captured, processed and analysed,” said Geoff Blaber, analyst at CCS Insight.

“Computing is having to become increasingly distributed and that’s a huge opportunity for both companies be it in chips, tools or software.”

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