The technology industry's most affluent companies can't keep up with the boom. In the face of rising inflation and a slowing economy, investors erased $2 trillion from the market value of the largest tech companies.
This week, as the United States reported that economic output fell for the second straight quarter, Microsoft, Amazon, and Apple posted sales and profits that showed their businesses have the strength to survive.
Even though the economy is cooling, Microsoft and Amazon continued to grow their cloud businesses. Search advertisements continued to be in demand among travel companies and retailers. Apple increased its sales of apps and subscription services to make up for a downturn in its device business.
Dave Harden, the chief investment officer at Summit Global, a firm with about $2 billion under investment that counts Apple among its holdings, said it was a sign that tech may have already hit a bottom and is beginning to rebound.
Mr. Harden said that these guys are delivering. They are acting in a responsible manner and navigating through choppy waters.
The better-than-feared results lifted the companies' share prices and provided a boost to the stock market.
The results showed that the companies aren't immune to problems such as supply-chain disruptions, rising costs and shifts in customer spending Smaller companies are more vulnerable to the challenges of the economy than giant businesses.
The companies' chief executives used words like "challenges" and "uncertainty" to warn investors. Concerns about the economy are leading some of them to slow the pace of hiring and take other precautions, but they haven't said they plan to begin layoffs.
The slowing economy was cast as an opportunity by the company's chief executive. It is difficult to always take the time to do all the readjustments when you are in growth mode.
Microsoft said it expected double-digit revenue growth for the next year, and Amazon said it expected sales to increase at least 13 percent.
The finance chief of Amazon said it would have more product in stock and speedier deliveries, while the CEO of Microsoft said it would invest over the year to take share and build its businesses.
Sean Stannard-Stockton is the president of Ensemble Capital, a San Francisco-based investment firm with over one billion dollars in assets. A lot of businesses will see their growth rate increase if we avoid a severe recession.
The companies bought back tens of billions of dollars in stock, even though they didn't give guidance. The companies believe that their businesses will continue to grow in the years to come.
The company formerly known as Facebook reported a decline in revenue for the first time since going public a decade ago. Its troubles were caused by rising competition from TikTok, as well as challenges from privacy changes on the iPhone.
According to GroupM, the advertising market is expected to grow over the course of the next two years. Last year, when Facebook sales grew, it made sense to keep growing.
The e- commerce market has faced similar challenges. Amazon advanced an ambitious plan to open dozens of new warehouses because of a surge in online orders during the Pandemic. With the number of items it sold up just 1 percent in the most recent quarter, it decided to close or delay at least 35 warehouse openings.
About 10 percent of the staff at Shopify will be cut. This year will be a transition year in which e- commerce is largely reset to the growth levels it recorded before Covid-19, according to Harley Finkelstein, president ofshopify.
Most of Apple's devices are made in China. The company said in April that it would lose $4 billion in sales due to factory shutdowns in China. In the period, it was able to increase its sales of iPhones by 3% and set a quarterly record for the number of people who traded in their phones for the Apple product.
Tim Cook, the chief executive of Apple, said that the company had a number of challenges, including the supply constraints, the strengthening dollar, and the slowing global economy.
Mr. Cook said that they were happy with the growth that they put up. He said that the company would invest through a downturn in order to recognize the realities of the environment.
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