(Reuters) - Google parent Alphabet Inc (GOOGL.O), Microsoft Corp (MSFT.O) and Amazon.com Inc (AMZN.O) made headway in the latest quarter in the areas that will be their main engines of growth for years to come, driving up shares across the tech sector on Friday.
Shares of all three surged in early trading, adding more than $120 billion to their combined market value - more than the gross domestic product of Morocco.
For Alphabet, search traffic on mobiles surpassed desktop traffic worldwide for the first time, while Amazon was able to boost margins, an area of concern, as its cloud business boomed.
Microsoft's growing emphasis on cloud computing under Chief Executive Satya Nadella also put the company on track successfully transition away from its slowing business that relies on sales of personal computers.
Alphabet's shares jumped 10.5 percent to a record high of $752.50 in early trading, adding about $50 billion to its market value. This gave Alphabet a market cap of about $522.5 billion, cementing its position as the second-most valuable stock after Apple Inc (AAPL.O), which is worth about $660 billion.
Microsoft's shares jumped 11.6 percent to $53.61 - their highest in 15 years - while Amazon surged as much as 10 percent to $619.45, also a record high. The tech-heavy Nasdaq composite index .IXIC was up about 1.8 percent.
"I think what you're seeing is these companies finally able to address the primary challenges that have been facing the businesses," said James Cakmak, an analyst at brokerage Monness, Crespi, Hardt & Co in New York.
"For Amazon it's margin, for Alphabet it's mobile, for Microsoft it's the cloud or diversifying away from its legacy businesses."
The better-than-expected results are a bright spot for the market following a period of intense volatility over worries about China and the timing of a U.S. interest rate hike.
Before the start of the third-quarter reporting season, corporate earnings had been expected to fall by 4.1 percent, according to Thomson Reuters data.
The three companies' results show that a key part of the U.S. economy continues to function well even as the global economy slows, said Adam Sarhan, chief executive of investment advisory firm Sarhan Capital in New York.
"The technology sector, specifically the Internet sector, remains bright," he said.
Cloud computing remains the priority for Alphabet, Amazon and Microsoft as large enterprises shift to Internet-based services to host and manage their data.
"I think the combination of Amazon, Microsoft and Google, as the technology leaders of the world, each showing accelerating growth in their Internet-related businesses, represents a very powerful statement," said Frederick Moran, an analyst at brokerage Burke and Quick Partners in Uniondale, New York.
For Amazon, cloud computing is its fastest growing business and the company said on Thursday it was investing in new services such as Internet of Things to capitalize on rising demand to store and manage large amounts of data.
While selling cloud storage space to enterprises remains a miniscule part of Alphabet's revenue, Google CEO Sundar Pichai said on Thursday that it was a growing priority.
"Every businesses in the world is going to run on cloud eventually. So, we view it as an amazing opportunity," he said.
At least 30 of 50 analysts covering Alphabet raised their price targets - Bernstein to $950.
At least 11 of 34 Microsoft analysts raised theirs. BofA Merrill Lynch was the most bullish with a target of $63.
Of 42 analysts covering Amazon, at least 20 raised their targets. Piper Jaffray and JP Morgan were the most bullish with price targets of $800.
Reporting by Sweta Singh, Abhirup Roy, Anya George Tharaka and Tenzin Pema in Bengaluru; Writing by Sayantani Ghosh; Editing by Ted Kerr