The super-earnings week just ended, and the results showed that the world’s top tech companies had their most volatile quarter in recent years, with financial forecasts and spending outlooks showing the breadth of the economic slowdown and the rapid deterioration in market conditions in recent months.
Amazon (AMZN-US) reported unexpectedly strong earnings last quarter, with two consecutive quarters of profits, but on the same day Intel (INTC-US), however, shocked investors by announcing that it was in a loss and the biggest drop in revenue in more than 10 years. The day before, Facebook parent company Meta (META-US) announced the first decline in revenue in history, Microsoft (MSFT-US)’s revenue growth rate fell to the slowest in two years.
Overall, Apple, Microsoft, Alphabet (GOOGL-US) and Meta’s revenue in the last quarter still increased compared to the same period last year, but both fell by at least 1% quarter-on-quarter.
The Wall Street Journal (WSJ) reported that high inflation is stifling consumer buying of a variety of commodities, coupled with a strong dollar and supply chain bottlenecks, so that technology companies that were previously immune to market turmoil are also feeling the impact of performance.
wider economic turmoil
“The macro economy is pretty tough,” said Brian Olsavsky, Amazon’s chief financial officer. “We realize the situation is changing very quickly and will be watching closely.”
Intel Chief Financial Officer David Zinsner also expressed concern about the environment and revised down the full-year revenue outlook by as much as $11 billion. “We expect the environment to remain weak and the economy may enter a recession.”
The financial reports of tech giants also show that no matter whether software or hardware, there is no escape from economic headwinds. Intel expects the PC market to decline by 10% annually, Qualcomm (QCOM-US) cut 5G phone shipments this year, Microsoft’s video game sales fell last quarter and Alphabet said advertisers were cutting spending, echoing Meta Chief Executive Mark Zuckerberg’s warning about online .
Cautious spending, impact of foreign exchange losses
A few businesses were largely unaffected, such as Apple’s iPhone sales last quarter that beat Wall Street expectations, but Cook said the company would be more “cautious” about spending than before.
Meta lowered its total spending forecast for this year, and Intel’s full-year capital spending cut by about $4 billion will slow down the pace of human recruitment. Microsoft said it would slow down the depreciation of servers and network equipment.
The rapid appreciation of the dollar has also eroded the overseas earnings of the tech giants, with Microsoft forecasting the impact of foreign exchange losses early in June and saying this week that the situation worsened at the end of the quarter. Even Apple, which has shown resilience, can’t escape the impact of the dollar’s appreciation, suggesting that this quarter’s foreign exchange losses may be slightly higher than the previous quarter.
The U.S. stock market earnings season is not over yet. Next week, the market will be able to look at the earnings reports of the technology industry’s “gig economy” players, and get a glimpse of how high inflation affects consumers’ wallets, including Uber (UBER-US)、Airbnb(ABNB-US) and DoorDash(DASH-US)。
Upholdings group manager Robert Cantwell, which trades mostly tech ETFs, is optimistic that tech earnings may have bottomed out, which could be the worst growth rate we won’t see again in the next few years.NasdaqThe index fell about 15% in the second quarter, but rose 12.4% in July.