Google and Apple both reported disappointing fourth-quarter 2022 results on Thursday, while Amazon outperformed expectations. Both companies also expressed concern about the upcoming months.
Profits were reported by technology behemoths, and Meta’s stock soared after the company reported better-than-expected results and announced spending and job cuts the day before.
These findings come after weeks of unprecedented layoff rounds in the previously impregnable technology sector as a result of bleak economic forecasts.
The downturn followed an extended period of extraordinary growth during the peak season of online work, shopping, and entertainment during COVID-19.
“Big Tech calls from Apple, Amazon, and Alphabet painting a much different picture of demand environment than the tech bears were hoping for,” Wedbush analyst Dan Ives tweeted.
According to earnings reports, there is “caution in the air,” but the analyst believes the companies are on track for soft landings.
Alphabet, Google’s parent company, reported fourth-quarter revenue of $76 billion and profit of $13.6 billion, both of which were down year over year and contributed to a more than 3% drop in share price in after-market trading.
According to Factset, Google saw a drop in crucial advertising sales, despite the fact that this was slightly better than analysts predicted.
The macroeconomic environment has become more challenging after a period of significant acceleration in digital spending during the pandemic, according to Google CEO Sundar Pichai during an earnings call.
Mr. Pichai announced 12,000 layoffs last month in order to combat systemic over-hiring and redirect resources to emerging priorities such as AI.
The rapid rise of user-friendly AI, such as ChatGPT, has caught Google off guard because it is viewed as a potential threat to Google’s dominance in the search engine market.
Apple is the only major US technology company that has not announced significant layoffs in recent weeks.
Due to lower demand for its flagship iPhone, the world’s most valuable company saw a decline in quarterly revenue and profits in the last three months of 2017.
Apple’s sales were hampered by China’s zero-Covid policy, which was only recently lifted. This resulted in decreased factory output.
On an earnings call, Apple CEO Tim Cook stated that the company faced “COVID-19 related challenges” that “significantly” reduced supply of the iPhone 14 Pro and iPhone 14 Pro Max for the majority of December.
Analysts’ predictions were significantly off, as Apple’s revenue of $117.1 billion was 5.4% lower than the same quarter last year.
“We know Apple is not immune to it,” Cook said, “and the world continues to face unprecedented circumstances, from inflation to war in Eastern Europe to the pandemic’s lingering effects.”
Despite announcing a massive round of layoffs to correct a hiring binge during the pandemic, Amazon reported an inflation-fueled increase in sales when business growth accelerated.
On an earnings call, Amazon CFO Brian Olsavsky stated that “during periods of economic uncertainty, consumers are very careful about how they allocate resources and where they choose to spend their money.”
We observed a decrease in discretionary spending followed by an increase in value brand purchases, particularly in the electronics market.
Following the hiring of over 800,000 people during the peak of the pandemic, the company announced last month that it would be laying off more than 18,000 workers.
Although Amazon’s quarterly revenue of $149.2 billion exceeded analysts polled by Factset’s initial estimates, the company’s profit plunged to near zero.
“We face an uncertain economy in the short term, but we remain quite optimistic about Amazon’s long-term opportunities,” said CEO Andy Jassy.
The Big Tech earnings dump came just one day after Meta reported a better-than-expected 1% quarterly sales decline and Facebook announced that it had reached two billion daily users.
Meta stock finished the day’s formal trading session up 23%.
The Hindustan Herald Is Your Source For The Latest In Business, Entertainment, Lifestyle, Breaking News, And Other News. Please Follow Us On Facebook, Instagram, Twitter, And LinkedIn To Receive Instantaneous Updates. Also Don’t Forget To Subscribe Our Telegram Channel @hindustanherald