Google and Apple on Thursday reported poor results for the final quarter of 2022 as Amazon beat expectations, but warned the coming months would be uncertain at a difficult moment for big tech.
The tech titans reported gains as shares of Meta soared a day after announcing better-than-expected results and spending and job cuts.
The results follow weeks of unprecedented rounds of layoffs in the normally unassailable tech sector amid pessimism about the economic outlook.
The bad sentiment followed a long stretch of outsized growth during the Covid-19 peak as consumers turned online to work, shop and entertain.
“Big tech calls from Apple, Amazon and Alphabet paint a very different picture of the demand environment than tech bears were hoping for,” Wedbush analyst Dan Ives tweeted, referring to investors who believe the stock is headed for a down path.
While earnings reports show that “caution is in the air,” there are signs the companies may be heading for a soft landing, the analyst added.
Google parent Alphabet’s fourth-quarter sales and profit of $13.6 billion were down from the same period last year, with aftermarket share prices falling more than 3 percent.
According to data compiled by Factset, Google saw its crucial advertising sales slump, which came in slightly better than analysts had forecast.
“It is clear that the macroeconomic climate has become more difficult after a period of significant acceleration in digital spending during the pandemic,” Google CEO Sundar Pichai said in a conference call.
Pichai last month announced a plan to lay off 12,000 employees to reverse pandemic-related overstaffing and focus on new areas, particularly artificial intelligence.
Google has been surprised by the sudden rise of user-friendly AI like ChatGPT, which is seen as a potential rival to Google’s popular search engine.
Apple is the only US tech giant that hasn’t announced any major layoffs in recent weeks.
The world’s largest company by market value reported a decline in quarterly revenue and profit for the last three months of last year, impacted by a decline in sales of its flagship iPhones.
Apple sales have been impacted by curtailed production at factories due to China’s recently lifted zero-Covid policy.
“COVID-19-related challenges” that “substantially” reduced Apple’s supply of iPhone 14 Pro and iPhone 14 Pro Max continued through most of December, Apple CEO Tim Cook said on a conference call.
Apple’s revenue came in at $117.1 billion, down 5.4 percent year-on-year from the year-ago quarter, missing analysts’ forecasts.
“The world continues to face unprecedented circumstances, from inflation to the war in Eastern Europe to the ongoing impact of the pandemic, and we know Apple is not immune,” Cook said.
Amazon, meanwhile, reported an inflation-driven increase in sales, although the company announced a massive round of layoffs to rectify a hiring frenzy during the pandemic as business growth accelerated.
“During times of economic uncertainty, consumers are very mindful of how they allocate their resources and where they spend their money,” Amazon chief financial officer Brian Olsavsky said on a conference call.
“We’ve seen them spend less on discretionary categories and move from tokens to lower-priced items in categories like electronics.”
Last month, the company announced plans to lay off more than 18,000 employees after adding 800,000 to its workforce during the peak years of the pandemic.
Amazon’s sales of $149.2 billion for the quarter were better than initial projections from analysts polled by Factset, but profit was hit hard, falling to near zero.
“We face an uncertain economy in the near term, but we remain fairly bullish on the long-term opportunity for Amazon,” said CEO Andy Jassy.
The big-tech revenue dump came a day after Meta said quarterly sales fell a percent, beating expectations, and announced that the number of daily users on Facebook hit two billion for the first time.
Meta shares ended the formal trading day up 23 percent.
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