Amazon, Apple beat expectations to ease fears of slowdown

Amazon beat sales estimates to reach US$121 billion (S$167 billion) in the quarter. PHOTO: REUTERS

SAN FRANCISCO (AFP) - Tech giants Amazon and Apple delivered forecast-topping results on Thursday (July 28), offering some reassurance to an earnings period weighed down by inflation, economic turmoil and war.

A crowded period of results from the world’s biggest technology firms has been marked by misses and uncertainty - making it clear that the pandemic-era boom has tipped towards downturn.

Amazon beat sales estimates to reach US$121 billion (S$167 billion) in the quarter, and revenue climbed at its cloud-computing platform Amazon Web Services, which brought in US$5.7 billion. The market responded with a 12 per cent jump in after-hours trading.

For Apple, product sales tallied US$63.4 billion in a drop from the same period a year earlier, but the dip was more than made up for by services revenue that climbed to US$19.6 billion, earnings figures showed.

“Our June quarter results continued to demonstrate our ability to manage our business effectively despite the challenging operating environment,” Apple chief financial officer Luca Maestri said in a statement.

Recession fears, a strong dollar, shrinking advertising budgets and inflation - headwinds are coming from every direction at the moment.

Analyst Andrew Lipsman said: “Amazon managed pretty well through the second quarter despite tough macro conditions and added costs weighing on its bottom line.”

Microsoft and Facebook-owner Meta both cited the harm to their business from a strong dollar: When America’s currency gains too much value, it can make products more expensive overseas or eat away at a beneficial exchange rate.

The social media giant pointed to the greenback’s role in the firm’s first year-on-year revenue decline since going public in 2012.

Not much good news

In addition to the generally bumpy economic times, firms such as Netflix and Meta are fighting fierce competition from rivals - and both reported losing some ground.

Meta lost about two million monthly users between quarters, and Netflix shed nearly a million paying customers, which was less than expected.

Yet, Netflix stock is up about 1 per cent in the past five days, with investors potentially hopeful after the firm projected a coming rebound in subscribers.

Markets seemed similarly assuaged despite Google parent Alphabet missing on revenue and profit.

The Silicon Valley giant’s bad news was not unexpected; the flow of online ad dollars that fuels the company’s fortunes has slowed as inflation, the Russian-Ukraine war and other troubles vex the overall economy.

“Still, with its tremendous market share in search advertising, Google is relatively well positioned to weather the rough waters that lie ahead,” said analyst Evelyn Mitchell.

As advertisers have tightened their belts, and Apple’s privacy changes have bitten into firms’ sales of costly but highly targeted ads, the damage was uneven.

Meta’s income has taken a beating, and with a share price that has lost about half its value since February, it is clear that investors are still wary about the company’s future.
Analysts noted that Meta’s reported 14 per cent drop in average price per ad was a steep change coming on top of the first quarter, when ad prices dipped 8 per cent.

“The good news, if we can call it that, is that its competitors in digital advertising are also experiencing a slowdown,” said analyst Debra Aho Williamson.

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