Big tech companies post strong results despite economic slowdown

Second-quarter results for the main tech companies have turned out to be better than expected, with a few nuances. Big Tech sailed through the Covid-19 pandemic without losing profits, and the fact that some of these companies are now showing signs of weakness does not take away from their overall resilience to today’s volatile situation. With the exception of Twitter, whose results last week evidenced the uncertainty derived from Elon Musk’s troubled acquisition operation, and a slight decline in revenue reported by Meta, Microsoft, Amazon, Google and Apple have performed strongly at a time when consumer appetite is geared primarily towards services.

Alphabet, Google’s parent company, and Microsoft posted double-digit second-quarter revenue growth, giving them breathing space for months to come and reassuring investors fearful that tech companies would be dragged down by the economic slowdown. Alphabet shares rose 4% and Microsoft shares rose 3.8% on Wednesday, hours after their results were released.

Meta, the parent company of social networks Facebook and Instagram, reported its first quarterly decline in a decade, citing advertiser budget cuts as the cause. Revenue fell to $28.8 billion in the second quarter, slightly below analysts’ average estimate of $28.9 billion. Shares fell as much as 8.7% on Wednesday, the biggest drop in two months.

Things were looking better for Apple. Despite rising inflation, consumer retrenchment, a strengthening dollar and a logistics deadlock caused by periodic lockdowns in China, its share price has risen in recent weeks and is on track for its biggest monthly gain yet in almost two years, with a 15% rise in July. Its stocks have outperformed Microsoft, Alphabet and Amazon this month, and are also cornering gains in the S&P 500 and Nasdaq indices.

Apple reported second-quarter results that narrowly beat Wall Street estimates, easing concerns that supply chain problems and an unstable economy would weigh on the tech giant's sales. Sales of iPhone and iPad devices fared better than expected, although other products, including Macs and wearable devices, fell short of projections.

Amazon also beat revenue forecasts, despite investor concerns about possible belt-tightening by inflation-hit consumers. The online retail giant invoiced 7.2% more last semester than a year ago ($237.6 billion compared to $221.5 billion in the same period of 2021). Short-term prospects are good, with third-quarter profits expected to rise from a subscription fee hike - a nearly 40% rise - on its Prime Video platform. Shares rose 11% on Thursday after the bell rang. The e-commerce giant is expecting summer sales of between $125 billion and $130 billion, with profits of around $3.8 billion.