Even the wealthiest companies in the tech industry won’t have a boom forever. Investors punished the largest tech companies earlier this year, erasing $ 2 trillion in market value for fear of the industry declining in the face of rising inflation and a slowing economy.
But this week, as the U.S. reported a decline in economic production for the second straight quarter, Microsoft, Alphabet, Amazon, and Apple posted sales and profits to tackle the economic woes that hurt small businesses. Showed that its business has superiority and diversity.
Microsoft and Amazon have proven that profitable cloud businesses continue to grow as the economy cools. Google, a subsidiary of Alphabet, has shown that search advertising continues to be in demand among travel agencies and retailers. Apple also reported on the downturn in the device business by increasing sales of apps and subscription services.
Dave Harden, chief investment officer at Summit Global, said Apple’s company near Salt Lake City has invested about $ 2 billion. ..
“These people are still delivering,” Harden said. “They act responsibly and navigate the choppy periods.”
Even though Alphabet and Microsoft fell short of Wall Street expectations, better than fear pushed up corporate stock prices and shocked the stock market.
The results show that companies are unaffected by problems such as supply chain disruptions, rising costs, and changing customer spending. But their giants aren’t as vulnerable to small and medium-sized businesses like Twitter and Snapchat owner Snap, to the challenges of the economy as a whole.
In a phone call with analysts, the company’s CEO used words like “challenge” and “uncertainty” to warn investors about the coming months. Some companies, including Alphabet, are slowing down hiring and taking other precautions due to economic concerns, but no one says they plan to start layoffs.
Alphabet CEO Sundar Pichai has taken the opportunity to slow the economy, saying the company has focused and “more disciplined as it moves forward.” “When we’re in growth mode, it’s hard to always take the time to make all the necessary readjustments, and these moments give us a chance,” he added.
Interpreted by many investors as optimistic about the industry, Microsoft expects sales to grow by double digits next year, and Amazon expects sales to grow by at least 13% this quarter. He said he was.
Microsoft CEO Satya Nadella said the company will invest more than a year to gain market share and build a business, while Amazon financial officer Brian Olsavsky has more product inventories and more. He said he would deliver quickly.
“This is not a forecast of a recession,” said Sean Stanard Stockton, president of Ensemble Capital, a San Francisco-based investment firm that manages $ 1.3 billion. “It’s clear that many of these companies will recover growth if they avoid a serious recession.”
Apple and Alphabet didn’t provide guidance, but they bought back tens of billions of dollars in stock during the period. Apple’s $ 21.7 billion purchase and Alphabet’s $ 15.2 billion purchase underscore both companies’ belief that their business will continue to grow.
Formerly known as Facebook, Meta is an outlier among the largest tech companies and has reported the first decline in quarterly revenue since it was released 10 years ago. The problem was the result of intensifying competition between users and TikTok, which robbed advertisers, and was a challenge due to Apple’s implementation of iPhone privacy changes.
According to market research firm GroupM, the advertising market is projected to grow by 8.4% this year and 6.4% in 2023. Brian Weezer, President of Business Intelligence at GroupM, said Facebook’s sales growth last year was “impossible to continue growing” as quarterly sales surged 56%.
Similar challenges are hitting the e-commerce market. Convinced that the surge in online orders during the pandemic represents a fundamental shift in how people shop, Amazon has pursued an ambitious plan to open dozens of new warehouses. However, due to cold sales (only 1% of products sold in the last quarter), the course was reversed and we decided to close, postpone, or cancel at least 35 warehouse openings.
Amazon’s small e-commerce rival Shopify said it would cut staff by about 10 percent. Shopify President Harley Finkelstein said this year will be “a transitional year in which e-commerce will be significantly reset” to the growth levels recorded prior to Covid-19.
Apple’s biggest obstacle was its reliance on China to manufacture most devices. In April, the company announced that it would reduce sales by about $ 4 billion due to the closure of its factory in Shanghai, which manufactures iPads and Macs. However, iPhone sales still increased by 3% during this period, and the number of people who replaced Android smartphones with iPhones set a quarterly record.
Apple CEO Tim Cook said Apple saw “headwind cocktails” such as supply constraints, a stronger dollar due to rising device prices abroad, and a slowdown in the global economy.
“Given the number of challenges this quarter, we’re really happy with the growth we’ve made,” Cook said. He added that the company will invest through the recession, but “be aware of the reality of the environment and invest cautiously.”
