Big Tech have all released their quarterly results and they paint the same bleak picture.
Apple (AAPL)
Apple used to be the most resilient of the lot but it reported a 5% fall in revenue. The last time Apple experienced a sales decline was 4 years ago.
Earnings was also down 11% from a year ago. Both revenue and earnings came in lower than analysts’ expectations.
Mac revenue was particularly bad, due to the lack of a new model, sales was down 29%.
Even the key product, iPhone, experienced a 8% drop in sales.
Only iPad and services revenue were up 30% and 6% respectively.
Apple blamed the underperformance on the strong US Dollar (losses in forex), lower production of iPhone 14 due to Covid lockdowns in China, and the economic slowdown.
Microsoft (MSFT)
Microsoft had a 2% growth in revenue, which met the expectation. Nonetheless the growth rate continued to slow (slowest since 2016).
And the next quarter isn’t any better as the guidance was a 3% growth.
The key growth driver was its cloud services Azure where it grew 31%, slowed from 35% in the previous quarter.
Microsoft has been seen as the resilient one considering that their customers are mostly corporates and their spending are stickier than consumers. Yet, we see weak growth here too.
Alphabet (GOOGL)
Alphabet missed both revenue and earnings expectations.
It only managed to grow its revenue by 1%. The weak ad market continue to weigh on Google and YouTube – their revenue were down by 2% and 8% respectively.
Google Cloud grew 32%, at a similar pace with Azure, which helped to pull up the overall growth rate for Alphabet.
Amazon(AMZN)
Amazon grew the most among the Big Tech – revenue was up 9%. But this is the lowest growth rate since Amazon was a public company.
Amazon Web Services grew just 20%, the slowest among the Big Tech. It has to keep up with the pace in order to maintain its market leadership position.
The bright spot for Amazon is its advertising. It grew 19% when Alphabet and Meta were seeing declines.
Meta (META)
Lastly we have Meta.
Its sales declined 4% while earnings tanked by 55%.
Meta has to declare a year of ‘efficiency’ where it focuses on cutting costs. It has already fired 11,000 workers and expect slowing increase in payroll expenses.
The guidance remains weak for the next quarter, between a 6% decline to a 2% growth for its revenue.
In terms of share price, Meta performed the best – up 23% a day after the results were released.
The rest of the Big Tech share prices were down after earnings releases. However, it isn’t because Meta results were better but its share price was beaten down too much that caused this price rebound to be strong.
Overall the results for Big Tech were disappointing but give the Big Tech a chance.
They are are gigantic companies now and seeing slowing growth is expected. Moreover, growth was brought forward during the pandemic and now things are normalizing.
Demand for hardware products and ad spend are dependent on the economy, which is cyclical in nature. This means that eventually the demand would be back and the Big Tech numbers would look better again.
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