Big Tech Bonanza

Big Tech Bonanza

over 3 years ago3 mins

Mentioned in story

Last week, big tech companies reported how they performed last quarter, and their results were generally pretty positive. Of course, there’s a lot more going on under the hood than you might notice at first glance.

🕰 Recap

  • On Monday, European software giant SAP reported worse-than-expected earnings thanks to a faltering cloud segment
  • Microsoft’s cloud business, meanwhile, is still going strong, and its quarterly earnings beat expectations on Tuesday
  • Amazon and Apple both reported their own better-than-expected quarterly results on Thursday
  • And on the same day, Alphabet, Facebook, and Twitter’s quarterly earnings trounced expectations too

✍️ Connecting The Dots

Investors have been on tenterhooks waiting to hear how big tech companies performed last quarter, but things didn’t get off to a good start: SAP’s shares plunged after the European software giant announced a drop-off in the growth of its cloud business, as well as pulled its targets for 2023. SAP, after all, has been doubling down on a shift away from “license software” and the up-front fees that come with it, and toward the faster-growing but slower-to-arrive profits of its subscription cloud business. Combine that profit slowdown with the fact it needs to spend more money on the segment, and investors weren’t a happy bunch. But at least Microsoft perked them back up the next day: its cloud businesses actually grew slightly faster last quarter.

Meanwhile, companies have been more willing to spend their advertising dollars lately, and both Alphabet and Twitter were more than happy to snatch them up. That uptick in ad spend might’ve benefited Amazon and Apple too: their products have been flying off their virtual shelves. Most of them, anyway: iPhones sales came in below expectations, probably because sales of the latest version – which was delayed till two weeks ago – weren’t included. Apple didn’t even make a forecast for the rest of the year, which might’ve given investors a sneak preview of how it’s been doing so far.

Amazon, on the other hand, did look to the future: the giant said it was expecting shoppers to do more shopping online this holiday season, but also that COVID-related costs would be higher. That’s actually why the holiday season has already kicked off this year for retailers everywhere: they’re worried the sharp uptick in orders could turn into a shipping nightmare, driving up costs even further.

🥡 Takeaways

Apple, Amazon, Microsoft, Alphabet, and Facebook are the five most valuable publicly traded companies in the US, and there’s growing concern about their dominance in the stock market and over their competitors. But this isn’t new: there have been lots of times in the last century where the biggest few companies have had an unnerving amount of influence. And while Big Tech’s to thank for most of the US stock market gains this year, history suggests their best days may already be behind them…

Ecommerce growth is expected to speed up yet again as the colder months start to descend, given that crowded malls and “door-buster” sales have – unsurprisingly – dropped out of vogue this year. In fact, analysts are expecting shoppers to make up to 35% more purchases online.

🎯 Also On Our Radar

The world’s biggest passive exchange-traded fund, or ETF, is losing investors faster than any of its rivals. That could be down to costs: it’s more than three times more expensive than its competitors, which is pretty punchy for a usually cheap way to invest in financial markets. ETFs are a great way to invest in a whole host of markets as easily as trading a single stock – though this just goes to show that you should think long and hard about which one you pick.

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