If you’re an investor in tech stocks, this week has been rocky — and it continues to be rocky weeks ago. Until yesterday, it looked like most tech stocks were doomed. A brief recap:
- crack (Snap): Last Thursday, Snapchat creator missed out on EPS and revenue, citing poor advertising sales and economic constraints. The stock sank 25%.
- Twitter (TWTR): Last Friday, the social media giant reported earnings, revenue and mDAU misses. Twitter’s revenue lapse was the biggest ever. reports CNBC.
- Microsoft (MSFT): On Tuesday, the Windows giant missed out on earnings and revenue, with citing a reference Foreign exchange rates, the war in Ukraine, and “a deteriorating PC market in June.”
- Alphabet (GOOG): Also on Tuesday, Google’s owner Alphabet Missed on earnings and revenue, and advertising revenue growth slowed as companies scaled back on marketing as inflation took a bite.
- meta (Meta): Facebook owner Meta on Wednesday deployment of Its first year-over-quarter revenue declined, citing weak ad sales due to inflation and Apple’s iOS privacy changes.
- Intel (INTC): Intel on Thursday announced Its revenue declined 22% year-over-year, driving the stock down more than 10%. Intel cited a “sudden and rapid decline in economic activity” as the biggest driver for the disappointing numbers.
It’s a very bad week for Big Tech, isn’t it? But then yesterday investors heaved a sigh of relief as two of the biggest players in the industry-Apple (AAPL) and heroine (AMZN) — Did something unexpected: They reported a relatively large number yesterday after the bell.
Apple informed of Revenue for the June quarter was a record $83 billion, of which $19.4 billion was a net profit. And the company’s flagship product—the iPhone—increased $40.6 billion in sales, up more than $1 billion from the same quarter a year ago. and like MacRumors reportsApple’s all-important services division now has 860 million paid customers — 160 million in just 12 months.
And Amazon? company informed of Stronger than expected sales of $121.2 billion in Q2 7% year-over-year. Amazon’s stock jumped over 12% in pre-market trading this morning on the news.
So why are Amazon and Apple doing so well compared to other Big Tech companies? It sounds so simple: Despite inflation and recession concerns, Amazon and Apple are offering products that everyday consumers are still willing to buy despite economic constraints.
Contrast that with Snap, Twitter, Meta and Alphabet whose “consumers” are mostly businesses (ie: advertisers). Advertising spending is one of the first things companies cut when the economy goes south. Even Intel and Microsoft—while they offer consumer products—get most of their revenue from selling to businesses, which minimizes purchases during uncertain times.
As Apple and Amazon show, if you sell products that people want, or see as a necessity, you can face an economic downturn in Big Tech compared to most of your rivals.