Tech giants Amazon and Apple reported better-than-expected results on Thursday, reassuring a period of earnings weighed down by inflation, economic turmoil and war.
A performance-laden period for the world’s biggest tech companies has been marred by setbacks and uncertainty – making it clear that the pandemic-era boom has tipped into a downturn.
Amazon beat sales estimates to $121 billion in the quarter, and revenue soared on its Amazon Web Services cloud computing platform, which brought in $5.7 billion. The market reacted with a 12% jump in after-hours trading.
For Apple, product sales reached $63.4 billion, down from the same period a year earlier, but the decline was more than offset by services revenue which soared to $19.6 billion. dollars, according to earnings figures.
“Our June quarter results continued to demonstrate our ability to effectively manage our business despite a challenging operating environment,” Apple’s chief financial officer Luca Maestri said in a statement.
Recession fears, a strong dollar, shrinking advertising budgets and inflation – the headwinds are blowing from all sides right now.
“Amazon did quite well in the second quarter despite challenging macroeconomic conditions and additional costs weighing on its results,” analyst Andrew Lipsman said.
Both Microsoft and Facebook owner Meta cited damage to their business from a strong dollar: When the U.S. currency gains too much value, it can make products more expensive overseas or erode a favorable exchange rate. .
The social media giant highlighted the greenback’s role in the company’s first year-over-year revenue decline since its IPO in 2012.
In addition to generally chaotic economic conditions, companies such as Netflix and Meta are battling fierce competition from rivals – and both have said they are losing ground.
Meta lost about two million monthly users between quarters and Netflix lost nearly one million paying customers, which was less than expected.
Still, Netflix stock has risen around 1% in the past five days, with investors potentially bullish after the company predicted an upcoming rebound in subscriber numbers.
Markets also appeared to be calm despite the absence of Google’s parent Alphabet in terms of revenue and profit.
The Silicon Valley giant’s bad news was not unexpected, as the flow of online ad dollars that fuels the company’s fortunes has slowed as inflation, war and other troubles plague the economy. global.
“Nevertheless, with its huge market share in search advertising, Google is relatively well positioned to weather the choppy waters ahead,” said analyst Evelyn Mitchell.
While advertisers have tightened their belts and Apple’s privacy changes have bitten into sales of expensive but highly targeted ads, the damage has been uneven.
Meta’s earnings have taken a hit, and with a share price that has lost about half its value since February, it’s clear investors are still wary of the company’s future.
Analysts noted that Meta’s 14% drop in average price per ad was a dramatic change on top of the first quarter, when ad prices fell 8%.
“The good news, if you can call it that, is that its competitors in digital advertising are also experiencing a downturn,” said analyst Debra Aho Williamson.
Snapchat’s parent company, for example, reported that its loss in the last quarter nearly tripled to $422 million, despite a 13% increase in revenue in “tougher” than expected conditions.
“We are not happy with the results we are seeing, regardless of the current headwinds,” California-based Snap said in a letter to investors last week.
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