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Big Tech Earnings: Apple, Alphabet, Meta, and Amazon

Plus500 | Tuesday 31 January 2023

This week, earnings season continues in full swing with some of the biggest tech companies in the field. Meta, Alphabet, Apple, and Amazon are scheduled to report their financial earnings. What can be expected from these tech behemoths’ quarterly earnings results, especially in light of the recent tech layoffs, and hiring freezes?


Meta’s Earnings Report: Ads, Layoffs, and Recession Fears

On Wednesday, social media mogul Meta (META) is expected to report earnings after market close.  This company along with some of its peers suffered ostensible economic headwinds in 2022 as it wiped out more than half of its value in the past two years. The losses incurred in 2022 by what was once among the 10 biggest companies in market capitalization, can be traced back to skyrocketing inflation, revenue loss reported in successive quarters, and underwhelming earnings results.  Therefore, it might not come as a surprise to learn that in November 2022, Meta resorted to laying off 13% of its workers.

In addition, to the aforementioned hurdles, Meta along with other ad-reliant competitors like Snap (SNAP) which is expected to report its earnings on Tuesday, had to grapple with looming recession fears, on the one hand, and ad-targeting prohibition, on the other hand. In 2021,  Apple (AAPL) launched its App Tracking Transparency (ATT) feature, which restricted advertisers' access to smartphone user identifiers, hence limiting ad targeting. This restriction along with the aforementioned economic obstacles put a strain on Meta’s growth with the company even stating last year that this feature can cut its revenue by $10 billion in 2022. 

As it stands, analysts expect Meta’s Q4 earnings to reveal a revenue drop of 7.02% compared to the same quarter a year ago, coming in at $31.31 billion, a decline of about 40% from the year-ago figures for that same quarter, and $2.23 per share. Nonetheless, despite this potentially dreary outlook, as of the time of the writing in 2023, Meta’s stock price rose by 17.8% but whether or not it will remain this way following tomorrow’s earnings report is yet to be determined. Traders and investors may be looking forward to Meta’s earning report to see how the overall advertising market is doing. (Source:CNBC)

How Did Apple Perform in 2022’s Last Quarter?

iPhone-maker and tech behemoth, Apple is also expected to report its Q4 2022 earnings on Thursday, the 2nd of February. Apple too was not spared of 2022’s economic hurdles, while it did not lose as much as Meta, the former erased 26.8% of its value. According to market analysts, Apple is expected to report its first YoY revenue decline since 2019 coming in at $121.19 billion and a share price of $1.94 per share. 

The factors behind analysts’ gloomy predictions could be that the company failed to produce a sufficient amount of iPhones due to COVID lockdowns in China which shut down its main factory there. This production failure on Apple’s end was also highlighted during Christmas whereby not enough iPhones were available for sale. These problems are also driven by the fact that the PC sector, in general, is declining. As the pandemic restrictions recede and people return to normalcy, along with recession fears and an ailing economy, these problems are also being driven by declines in the PC and smartphone sectors.  However, as of 2023, Apple seems to be on a slight upward trajectory with its share price hiking by 14.3%.

Alphabet in Distress?

On Thursday, February 2, 2023, Alphabet will reveal how it fared in the last quarter of 2022. The search engine leader also hopped on the layoffs bandwagon as it announced on January 20th, that it would lay off 12,000 workers which amount to about 6% of its workforce. Alphabet’s CEO, Sundar Pichai, also revealed his salary, along with other senior executives’ salaries, will be reduced significantly. Accordingly, Alphabet lost about 38.6% in 2022.

Alphabet is under the scrutiny radar as it faced antitrust allegations and a lawsuit against its ad-tech business in its search engine, Google. In addition, Epic Games Inc., publisher of the famous videogame “Fortnite” also made antitrust allegations against Google. These factors along with the fact that inflation was surging in 2022, recession fears intensified, and the economy, as a whole, was suffering stunted Alphabet’s growth. Some analysts, predict the company’s total revenue to come in at $76.18 billion and its EPS to come in at $1.18. As of the time of the writing, in the first month of 2023, the company has risen slightly by 9.2%. (Source:Market Watch)

Amazon: E-Commerce Giant May Fail to Deliver 

Amazon (AMZN) is scheduled to report its Q4 2022 earnings on Thursday, February 2nd after market close. The E-Commerce company wiped out almost 50% of its value and also resorted to layoffs as a solution. Accordingly, the company revealed that it would fire 18,000 workers as it struggled to keep pace with the current economic climate.  Despite this, market predictions for Amazon’s earnings stand for revenue of $145.37 billion which is more than 5.8% YoY and a quarterly EPS of $0.15.

The market may want to keep an eye out for Amazon’s AWS cloud computing service as it is deemed a possible key indicator of the company’s growth and this service is one of Amazon’s biggest revenue streams. However, in spite of earlier hopes that cloud spending would continue to hold up, recent guidance from Microsoft has put Amazon Web Services in a tough spot. This is because Microsoft revealed that its Azure cloud-computing sales, which compete with Amazon’s AWS, are likely to slow by four or five points in the current quarter. Despite these hurdles, Amazon gained 17% but it remains to be seen whether it can sustain this recent growth following the release of its quarterly earnings report. 

This week marks an important week for traders, investors, and market watchers alike as these FAANG stocks' financial figures, could tell a lot about the economy, in general, and the constantly burgeoning tech industry, in particular.

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