Google and Apple reported downbeat results for the last quarter of 2022 on Thursday, while Amazon beat expectations but warned that the coming months would be uncertain for Big Tech. The tech titans posted earnings as Meta’s shares skyrocketed a day after it reported better‑than‑expected results and signaled spending cuts and job reductions. These outcomes follow weeks of unprecedented layoffs in the usually unassailable tech sector, amid growing pessimism about the economic outlook. The sour mood comes after a long spell of outsized growth during the peak Covid‑19 period, when consumers turned to online work, shopping, and entertainment.
“Big Tech calls from Apple, Amazon, and Alphabet paint a much different picture of the demand environment than the tech bears were hoping for,” tweeted Wedbush analyst Dan Ives, referring to investors who believe shares are on a downward path. While earnings reports show there is “caution in the air,” Ives added that there are signs the companies could be heading for soft landings.
Alphabet, Google’s parent company, posted fourth‑quarter revenue of $76 billion and profit of $13.6 billion, both below the figures from the same period a year earlier. Shares fell more than 3 percent in after‑market trading. Google saw a slump in its crucial advertising sales, which were only slightly better than analysts had projected, according to FactSet data. “It’s clear that after a period of significant acceleration in digital spending during the pandemic, the macro‑economic climate has become more challenging,” CEO Sundar Pichai said on the earnings call. Last month, Pichai announced a plan to lay off 12,000 employees to reverse pandemic over‑hiring and focus on new areas, especially artificial intelligence. Google was caught off guard by the sudden rise of user‑friendly AI such as ChatGPT, which is seen as a potential rival to its popular search engine.
Apple is the only U.S. tech giant that has not announced major layoffs in recent weeks. The world’s most valuable company reported a fall in quarterly revenue and profit for the final three months of last year, hit by a drop in sales of its flagship iPhones. Production at factories was curtailed by China’s zero‑Covid policy, which was only recently lifted. “COVID‑19‑related challenges” that “significantly” reduced Apple’s supply of the iPhone 14 Pro and iPhone 14 Pro Max lasted through most of December, CEO Tim Cook said on the earnings call. Apple’s revenue was $117.1 billion, down 5.4 percent from a year earlier and missing analysts’ forecasts. “The world continues to face unprecedented circumstances—from inflation to war in Eastern Europe, to the enduring impacts of the pandemic—and we know that Apple is not immune to it,” Cook added.
Amazon, meanwhile, reported an inflation‑fueled increase in sales despite announcing a massive round of layoffs to correct a hiring binge during the pandemic. “During periods of economic uncertainty, consumers are very careful about how they allocate their resources and where they choose to spend their money,” CFO Brian Olsavsky said on the earnings call. “We saw them spend less on discretionary categories and shift to lower‑priced items in value brands in categories like electronics.” Last month, the company said it would let go of more than 18,000 employees after its workforce swelled by 800,000 during the pandemic’s peak years. Amazon’s sales of $149.2 billion in the quarter beat FactSet forecasts, but profit fell to near zero. “In the short term, we face an uncertain economy, but we remain quite optimistic about the long‑term opportunities for Amazon,” CEO Andy Jassy said.
The Big Tech earnings slump came a day after Meta reported a 1 percent drop in quarterly sales, which still beat expectations, and announced that daily Facebook users hit two billion for the first time. Meta’s shares ended the trading day up 23 percent.
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