Big U.S Tech Report Earnings
Our focus remains on U.S earnings this week which has seen some of the globe’s largest FAANG constituents like META (formerly Facebook), Apple, Amazon, and Alphabet (formerly Google) report their earnings this week.
Alphabet Inc. (GOOGL)
Alphabet missed its earnings target due to weaker-than-expected earnings on revenues, which saw the stock move lower by quite a margin.
- EPS: $1.06 vs. $1.25 expected
- Revenue: $69.09 billion vs. $70.58 billion expected.
- YouTube advertising revenue: $7.07 billion vs. $7.42 billion expected
- Google Cloud revenue: $6.9 billion vs. $6.69 billion expected.
Revenue growth slowed to 6%, the lowest since 2013; the slowdown in revenue has been attributed to lower spending by companies on search ads as they may fear an economic downturn.
Meta Platforms Inc. (META)
If META were a nation, it would be classified as being in a technical recession as they have missed the earnings targets two quarters in a row. With their results in mind, the stock saw a significant drop after the announcement as market participants weigh in on their options.
- Earnings per share (EPS): $1.64 vs. $1.89 expected
- Revenue: $27.71 billion vs. $27.38 billion expected
- Daily Active Users (DAUs): 1.98 billion vs. 1.98 billion
- Monthly Active Users (MAUs): 2.96 billion vs. 2.94 billion expected
- Average Revenue per User (ARPU): $9.41 vs. $9.83 expected
META is increasingly being challenged by another social media platform, TikTok, and an update on Apple’s Privacy policy. Meta is also forecasting another revenue drop in the 4th quarter, as in the 3rd quarter, Meta’s costs and expenses rose 19% year over year to $22.1 billion. Operating income declined 46% from the previous year to $5.66 billion.
Apple Inc. (AAPL)
Apple has had a positive quarter, exceeding market expectations; as there is turmoil in the tech industry due to the state of the global economy, Apple is currently a star standing out.
- Earnings per share: $1.29 vs. $1.27 expected
- Revenue: $90.15 billion vs. $88.90 billion expected
- iPhone revenue: $42.63 billion vs. $43.21 billion estimated, up 9.67% year-over-year
- Mac revenue: $11.51 billion vs. $9.36 billion estimated, up 25.39% year-over-year
- iPad revenue: $7.17 billion vs. $7.94 billion estimated, down 13.06% year-over-year
- Gross margin: 42.3% vs. 42.1% estimated
It is interesting how the upcoming holiday season will affect apple as market sentiment shows a grim look on the industry at large. In their earnings announcement, Apple did not go into detail regarding their forecast; however, they expect revenue to fall by 8%.
Amazon.com Inc. (AMZN)
Amazon joins many Tech companies not hitting their financial targets in the fiscal year. Amazon announced its results which led to a plunge in its share prices as the market reacted to their results.
- Earnings per share: 28 cents per share
- Revenue: $127.10 billion vs. $127.46 billion, according to Refinitiv estimates
- Amazon Web Services: $20.5 billion vs. $21.1 billion estimated
- Advertising: $9.55 billion vs. $9.48 billion estimated
As round-up Tech stocks have been affected by high inflation and increasing interest rates, markets view that many tech giants will be doing some cost-cutting exercises in response to this.
