Google and Apple on Thursday reported downbeat results for the last quarter of 2022 as Amazon beat expectations, but warned that the coming months would be uncertain in a difficult moment for Big Tech. The tech titans posted earnings as shares in Meta skyrocketed a day after it reported better results than expected and signaled spending and job cuts.
The results follow weeks of unprecedented layoff rounds in the usually unassailable tech sector amid pessimism about the economic outlook.
The souring mood followed a long spell of outsized growth during the peak Covid-19 period when consumers went online for work, shopping and entertainment.
"Big Tech calls from Apple, Amazon, and Alphabet painting a much different picture of demand environment than the tech bears were hoping for," tweeted Wedbush analyst Dan Ives, referring to investors who believe shares are on a downward path. While earnings reports show there is "caution in the air" there are signs that the companies could be heading for soft landings, the analyst added. Google parent Alphabet's revenue of $76 billion in its fourth quarter and profit of $13.6 billion were below what it made in the same period a year earlier, with share prices falling more than 3 percent in after-market trade.
Google saw a slump in its crucial advertising sales, which were slightly better than analysts had projected, according to data compiled by Factset. "It's clear that after a period of significant acceleration in digital spending during the pandemic, the macro economic climate has become more challenging," Google CEO Sundar Pichai said in an earnings call.
Pichai last month announced a plan to lay off 12,000 employees in order to
reverse pandemic over-hiring and focus on new areas, especially artificial
intelligence.
Google was caught off guard by the sudden rise of user-friendly AI such as
ChatGPT, which is seen as a potential rival to Google's popular search
engine.
Apple is the only US tech giant that has not announced major layoffs in
recent weeks.
The world's biggest company in terms of market value reported a fall in
quarterly revenue and profits for the final three months last year, hit by a
drop in sales of its flagship iPhones.
Apple sales were hit by curtailed production at factories due to China's
zero-Covid policy that was only recently lifted.
"COVID-19 related challenges" that "significantly" reduced Apple's supply of
iPhone 14 Pro and iPhone 14 Pro Max lasted through most of December, Apple
chief executive Tim Cook said on an earnings call.
- 'Unprecedented circumstances' -
Apple's revenue was $117.1 billion, down 5.4 percent from a year ago for the
same quarter a year earlier, missing what analysts had forecast.
"The world continues to face unprecedented circumstances, from inflation to
war in Eastern Europe, to the enduring impacts of the pandemic and we know
that Apple is not immune to it," Cook said.
Amazon meanwhile reported an inflation-fueled increase in sales despite the
company announcing a massive round of layoffs to correct for a hiring binge
during the pandemic when business growth ramped up.
"During periods of economic uncertainty, consumers are very careful about how
they allocate their resources and where they choose to spend their money,"
Amazon chief financial officer Brian Olsavsky said on an earnings call.