US earnings season - mixed picture for big tech

02.02.2024

US earnings season - mixed picture for big tech

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Author - Josef Stadler

The earnings season in the USA gained momentum last week. From January 29th to February 2nd, more than 100 companies presented their financial results for the past fourth quarter of 2023. The focus of investors was particularly on the figures of major technology companies. It has been shown that industry giants like Alphabet (Google's parent company), Microsoft, or AMD (Advanced Micro Devices Inc.) struggle to meet the high expectations of investors or analysts. Microsoft recorded a revenue growth of 18%, and the adjusted earnings per share increased by more than 26% compared to the fourth quarter of 2022. Nevertheless, the stock lost around $11 or 2.7% on the reporting day. Alphabet, the competitor, fared even worse, with its shares plunging by 7.5% on the stock exchange after the quarterly results were released. The market value of the mentioned tech conglomerates alone decreased by around $190 billion on that Wednesday.

Meta surprises 

Apple, Amazon, and Meta Platforms (formerly Facebook) then reported on Thursday after the stock market closed. The iPhone manufacturer surprised positively in both revenue and profit figures. However, the revenue in the crucial Chinese market declined by 13%, which was also the reason for the negative market reaction. Amazon, the largest online retailer, benefited from the surprisingly active customer activity during "Black Friday" and "Cyber Monday." Additionally, the essential cloud business grew strongly due to numerous new AI applications. However, the most significant positive surprise came from Meta. After the disastrous year 2022, the company, founded by Mark Zuckerberg, is back on track. The revenue in the fourth quarter increased by 25%, and the profit tripled compared to the fourth quarter of the previous year. The company will also distribute a dividend of 50 cents per share to its shareholders for the first time. The outlook also convinced investors, further fueling the stock price.

Amazon, Meta & Co are planning to significantly increase their investment spending to modernize the architecture of their data centers. In turn, manufacturers of sought-after microchips and hardware such as Nvidia, AMD, or Super Micro Computer Inc., a manufacturer of server and storage systems, would benefit from this. The megatrend "Artificial Intelligence" (AI) remains intact.

 

Disclaimer

This information provides a market overview. It does not include any direct or indirect recommendation for the purchase or sale of securities or an investment strategy. Investment in securities is subject to price fluctuations due to market changes at any time. Presentation of past performance does not allow reliable conclusions about future results.

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