Big tech companies have had tough earnings seasons so far, and Thursday’s earnings reports are expected to show a similar trend.
The industry has been struggling in recent months after several years of significant profits driven by the demand for tech goods and services during the pandemic.
Several factors, including high inflation and interest rates, increased competition, and declining demand in the consumer and digital advertising markets, are combining to put pressure on the tech giants.
As a result, technology companies face a challenging business environment that impacts their financial performance.
Investors and analysts will be paying close attention to Alphabet, Amazon, and Apple’s earnings announcements on Thursday for the crucial December quarter. Wall Street has low expectations because the sector is still experiencing challenges.
The tech sector has been one of the driving forces behind the stock market as a whole in recent years, and the current earnings season has cast doubt on the sustainability of its growth.
Thursday’s earnings reports from Alphabet, Amazon and Apple will help us better understand how the industry is progressing and whether it can continue to perform at current levels.
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Earnings in the Industry
One of the most resilient tech giants in recent years, Apple, is expected to report its first quarterly revenue decline since 2019 with a decrease of 2% compared to the same period last year.
This could be because of a combination of factors, including increased competition, declining demand for tech gadgets, and high inflation and interest rates.
Alphabet, on the other hand, is expected to report flat revenue compared to last year, and Amazon’s sales are predicted to grow just shy of 6% year-over-year.
Despite the modest growth, Amazon’s profits are expected to fall by a significant 40.6% from the year-ago quarter, which could be a sign of declining demand for its products and services.
These earnings reports are likely to be another indicator that tech giants are no longer as immune to economic changes as they have been in the past.
Market analyst Joshua Warner at investment firm StoneX commented that “Apple proved more resilient than its Big Tech peers in the last quarter, but this earnings season could be tougher.”
He added that most of Amazon’s businesses are finding it harder to grow in the current economic environment, and the company has already warned of slower revenue growth during the holiday shopping season.
What It Shows
Alphabet, Amazon, and Apple are set to release their financial results for the final quarter of 2022, following the footsteps of Microsoft, Snap, and Meta. Microsoft reported weaker-than-expected revenue and a 12% decline in profits, compared to the year-ago quarter.
However, the cloud computing division saw a growth of 22% from the previous year, providing a glimmer of hope for investors. On the other hand, Snap faced a stall in revenue growth and a large net loss in the same period.
Meta, on the other hand, experienced its third straight quarterly decline in revenue and a drop in profits. Despite this, the company outperformed analysts’ sales expectations and reassured investors by focusing on efficiency rather than heavy investments.
This led to a surge in its stock price by nearly 20% in after-hours trading. The company also lowered its forecast for capital expenditures and increased its stock repurchase plan by $40 billion.
The announcement that Facebook reached 2 billion daily active users was another positive highlight from Meta’s report.
The guidance provided by these companies on the future outlook will be crucial in determining if the challenges of 2022 will continue into the new year. Despite some positive signs, it seems that the companies’ struggles are not yet over...Read More
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Source: Celebrity News