If you’re a technology stock investor, this week has been rocky — and that rockiness continued from the week before. Until yesterday, it looked like most tech stocks had gone under. A short summary:
- snap (SNAP): Last Thursday the Snapchat creator missed out on earnings per share and revenue, citing poor ad sales and economic headwinds. The stock fell 25%.
- Twitter (TWTR): Last Friday, the social media giant reported a profit, revenue and mDAU miss. Twitter’s revenue loss was the largest ever, reports CNBC.
- Microsoft (MSFT): On Tuesday, the Windows giant missed revenue and earnings, quote exchange rates, the war in Ukraine and “a deteriorating PC market in June”.
- Alphabet (GOOG): Also on Tuesday, Google owner Alphabet missed on revenue and earnings, and advertising revenue growth slowed as companies scaled back on marketing as inflation bites.
- meta (META): On Wednesday, Facebook owner Meta Posted the first quarterly year-over-year revenue decline, citing weaker ad sales due to inflation and Apple’s iOS privacy changes.
- Intel (INTC): On Thursday, Intel announced sales were down 22% year-over-year, pushing the stock down more than 10%. Intel cited “the sudden and rapid decline in economic activity” as the main cause of the disappointing numbers.
That’s a pretty bad week for Big Tech, right? But yesterday, investors breathed a sigh of relief as two of the industry’s biggest players:Apple (AAPL) and Amazon (AMZN) – did something unexpected: They reported relatively large numbers after the bell yesterday.
Apple reported a record revenue for the June quarter of $83 billion, of which $19.4 billion was pure profit. And the company’s flagship product, the iPhone, had sales of $40.6 billion, more than $1 billion more than in the same quarter a year earlier. And if MacRumors reportsApple’s all-important services division now has 860 million paid subscribers, up from 160 million subscribers in just 12 months.
And Amazon? Company reported stronger-than-expected revenue of $121.2 billion in the second quarter, up 7% year over year. Shares of Amazon are up more than 12% on the news this morning in premarket trading.
So why are Amazon and Apple doing so well compared to other Big Tech companies? It seems pretty simple: Despite concerns about inflation and recession, Amazon and Apple offer products that ordinary consumers still want to buy despite economic headwinds.
Compare that to Snap, Twitter, Meta, and Alphabet, whose “consumers” are usually businesses (ie: advertisers). Advertising spend is one of the first things companies cut back on as the economy moves south. Even Intel and Microsoft — though they offer consumer products — derive the bulk of their revenue from sales to companies, which are cutting back on purchases in uncertain times.
As Apple and Amazon show, if you sell products that people want or perceive as necessary, you can weather economic downturns better than most of your Big Tech rivals.