US Big Tech Earnings Week ends with two Wall Street heavyweights quarterly: Amazon e Apple.
The enthusiasm of investors is reflected above all in the trend of the stock of the e-commerce giant founded by Jeff Bezos which, immediately after the publication of the accounts, spikes in afterhours trading on Wall Street by about 13%.
The buys flock, albeit to a lesser extent, on Apple, the well-known iPhone manufacturer.
Apple: record turnover but growth rate slows
Not everything is perfect: the slowdown compared to the glories of the recent past is evident.
Apple accounts highlighted for example the weakening of the growth rate of turnover. Turnover rose 2% in the second quarter, compared to the + 36% growth rate in the second quarter of 2021, and after growth of more than 8% in the first quarter of 2022.
However, the turnover itself reached record levels, albeit with growth certainly not in golden times, equal to + 2%, to $ 83 billion, confirming itself above the $ 82.81 billion expected by analysts’ consensus.
The record was highlighted by the cfo of Apple, Luca Maestri which, based on what emerges from the press release, was expressed as follows:
“Results for our quarter ended June continued to demonstrate our ability to manage our business effectively, despite the challenging operating environment. We reported record revenue in the quarter ended June, with our active device base hitting an all-time record in every geographic segment and product category“.
Apple did not provide any guidance for the current quarter. Analysts expect earnings per share of $ 1.31, on nearly $ 90 billion in revenue.
Confident in the continuous growth of turnover Apple CEO Tim Cook who, in an interview with Cnbc, announced that, “in terms of outlook on the aggregate, we expect revenue to accelerate in the quarter ending in September, despite the presence of pockets of weakness“. And in fact, there are pockets of weakness, if we consider that, despite the turnover at record levels, Apple’s net profit fell 10.5% year-on-year in the second quarter, due to the different challenges that Big Tech is facing as well as, for all of Corporate America, the increase in inflation and the impact on consumer spending who, in the face of the price boom, tend to keep the tightest portfolio .
The budget has discounted also the effect of the lockdowns that have been imposed in China to stem the latest wave of Covid-19 infections, which have inevitably affected the country’s production and sales.
Market capitalization obviously suffered, dropped below the magical $ 3 trillion threshold to $ 2.5 trillion.
Apple: focus on eps and iPhone turnover in Q2
The Apple eps came in at $ 1.20, better than the expected $ 1.16, down 8% on an annual basis.
Going to examine the individual rumors of Apple’s turnover, it appears that.
- Revenue from iPhone sales was $ 40.67 billion, better than $ 38.33 billion and up 3% year-on-year.
- Revenue from the services business was $ 19.60 billion, up from $ 19.70 billion expected, up 12% year-on-year.
- Revenue from Apple’s other products amounted to $ 8.08 billion, below the expected $ 8.86 billion, and down 8% year-on-year.
- Mac sales revenue also fell short of expectations, coming in at $ 7.38 billion, below the consensus-predicted $ 8.70 billion, down 10% year-on-year.
- Revenue from iPad sales was $ 7.22 billion, better than the expected $ 6.94 billion, down 2% year-on-year.
- Gross margin was 43.26% compared to 42.61% forecast.
A positive view on Apple’s accounts came from Eric W. Woodring of Morgan Stanley. Woodring was particularly positive towards Apple’s services division, stressing that its solidity could allow Apple’s market capitalization to rise above the 3 trillion dollar mark.
At this point, the world of iPhone enthusiasts await theThe launch of the new iPhone 14 and Apple Watch Series 8 towards the end of autumn.
Amazon hangover on the stock market: stock + 13% post accounts
Greater euphoria followed the publication of the accounts of the Amazon e-commerce giant:
Amazon announced after the end of the trading day on Wall Street that it has finished the first quarter of the year with a loss per share of 20 cents, on revenues of $ 121.23 billion, compared to the $ 119.09 billion expected by the analyst consensus.
The loss per share was definitely a setback, if we consider that the consensus had forecast a profit per share of 52 cents.
Turnover rose 7% year-on-year, precisely beating the expectations of the consensus, a factor that triggered the 13% share on Wall Street.
Amazon Web Services generated $ 19.7 billion, more than the expected $ 19.56 billion.
The advertising revenue amounted to $ 8.76 billionmore than the estimated $ 8.65 billion.
For the third quarter, the retailer giant founded by Jeff Bezos announced revenues of between $ 125 and $ 130 billion, up between 13% and 17%, compared to sales of $ 126 billion estimated by the consensus.
Andy Jassy, CEO of Amazon, pointed out that, “Despite continuing inflationary pressures on fuel, energy and transportation costs, we are making progress on those costs that are easier to control.”
The mole that was repeated for the umpteenth time was however the investment in Rivian, which generated a loss of $ 3.9 billion for the American e-commerce giant, due to the drop in the prices of the electric vehicle manufacturer in the second quarter, equal to -49%.
The total loss suffered by Amazon for its investment in Rivian, relative to the whole of 2022, it rose to $ 11.5 billion.
Specifically, due to the devaluation of investments in Rivian, Amazon suffered an overall loss of $ 2 billion in the second quarter.
However, some experts point out that Amazon’s strength is represented by the business cloud: division is considered the key to the future of the company. As a result, the fact that Amazon’s division revenue has risen year-on-year is great news.
Of course, you have to consider fierce competition, represented in particular by Microsoft whose balance sheet showed a jump in its turnover cloud computing service, Azure, equal to + 40% on an annual basis.
Big Tech are discounting recession-inflation fear
At the end of a week that saw the profits of the Big Tech as protagonists, and in an economic situation in which the fear of a recession goes hand in hand with that of too high inflation still rooted in the US economy, the result that emerged from the various accounts appears to be mixed.
The difficult period was confirmed on Wednesday by Meta Platforms, la holding di Facebook, which announced that it has reported its first decline in revenue in its history on an annual basis.
While they were able to revive the markets Alphabet, the Google holding, and Microsoft also reported lower-than-expected profits.
Alphabet and Microsoft charge the markets with optimism pending Powell and Meta accounts
Meta Platforms publishes first ever revenue drop and Zuckerberg announces workforce cut in 2023
It was Apple CEO Tim Cook himself who admitted the inflation plug:
“We track inflation in our cost structure – he said – we see it in factors such as logistics and wages and some silicone components, and we are still hiring, but we are doing it in a thoughtful way “.
For Apple, one strength remains consumer interest in its iPhones, suggesting that demand for the iPhone 13 is remaining solid. But certainly in times of war even the titans of hi-tech made feel obliged to embrace the line of caution.