Big Tech's Big Week

Big Tech's Big Week Big Tech has had a mixed second-quarter earnings season. Alphabet, Amazon.com, Apple, Meta Platforms, and Microsoft haven't been as unstoppable this year as investors have gotten used to seeing over the past decade. Their combined weight of close to a quarter of the S&P 500 means the results matter for the broader market. The five Big Tech giants brought in a total of $354.6 billion in revenue in the second quarter and $56.8 billion in net income. Meta stock has had the roughest 2022—down 53% year to date. Apple is the best off, down 11%, ahead of the S&P 500's 15% decline. Microsoft is down 17%, Alphabet has lost 21%, and Amazon is off 27%. Here are the highlights from each company's second-quarter reports this week: Alphabet  What was reported: $16.0 billion in net income, or $1.21 in earnings per share (down 11%), on $69.7 billion in revenue (up 13%) What was expected: $1.27 in earnings per share and $69.8 billion in revenue The good: Google search advertising did better than expected, bucking fears after Snap's collapse last week. Google Cloud revenues jumped 36% year over year. The bad: Earnings per share missed estimates. CFO Ruth Porat warned on the earnings call that 2022 revenue faces strong year over year comparisons from last year due to pandemic-fueled growth. The stock reaction: Alphabet stock jumped 7.7% on Wednesday. Amazon What was reported: net loss of $2.0 billion, or 20 cents in earnings per share (versus a 76-cent profit in the year-ago quarter), on $121.2 billion in revenue (up 7%) What was expected: 12 cents in earnings per share and $119.0 billion in revenue The good: Amazon Web Services revenue was up 33%. Advertising revenue was up 18%. Management guidance for third-quarter revenue was above the Wall Street consensus. The bad: Inflationary pressures on fuel, energy, and transportation costs continued in the quarter. Amazon took a $3.9 billion write-down on its stake in electric truck manufacturer Rivian Automotive. Third quarter operating income guidance fell short of consensus. The stock reaction: Amazon stock surged 12% in after-hours trading Thursday. Apple What was reported: $19.4 billion in net income, or $1.20 in earnings per share (down 8%), on $83.0 billion in revenue (up 2%) What was expected: $1.16 in earnings per share on $82.8 billion in revenue The good: EPS and sales beat and iPhone revenue grew. Services revenue hit a quarterly record. The bad: Growth slowed and Apple declined to give guidance for the current quarter.  The stock reaction: Apple stock was up 3% in after-hours trading Thursday. Meta Platforms What was reported: $6.7 billion in net income, or $2.46 in earnings per share (down 32%), on $28.8 billion in revenue (down 1%) What was expected: $2.54 in earnings per share on $28.9 billion in revenue The good: Reels-related advertising crossed the $1 billion run rate. Meta reduced its expectations for full-year expenses by as much as $5 billion. The bad: Guidance for the third quarter was well below Wall Street estimates. Headwinds include the impact of Apple software changes for ad tracking and competition from TikTok, plus a weakening macro backdrop. The stock reaction: Facebook stock dropped 5.2% Thursday. Microsoft What was reported: $16.7 billion in net income, or $2.23 in earnings per share (up 3%), on $51.9 billion in revenue (up 12%) What was expected: $2.29 in earnings per share on $52.4 billion in revenue The good: Cloud revenue surged 46% year over year adjusting for currency changes. Management expects double-digit revenue and profit growth in Microsoft's June 2023 fiscal year. The bad: EPS missed. PC demand is slowing. Xbox hardware sales were down 11%. “Unforeseen items” including winding down Microsoft's Russia business reduced revenue by about $1 billion. The stock reaction: Microsoft stock added 6.7% on Wednesday.