Other than Apple, it was a tough earnings week for Big Tech. Alphabet, Amazon, Meta and Microsoft combined lost over $350 billion in market cap after offering less-than-encouraging commentary for the third quarter and the rest of the year.
The tech giants are finding themselves in an unfamiliar position after unbridled growth in the past decade, with slowing revenue growth or declines in Meta’s case, and efforts to control costs.
Apple’s strong third-quarter results this week came as a bright spot amidst concerns of inflation, rising interest rates, and a potential recession. The company beat expectations for both revenue and profit, and its stock had its best day in over two years on Friday.
Meta, on the other hand, has not been doing so well. In 2022, the stock price collapsed and Facebook’s parent company came up short on earnings. Additionally, the average revenue per user was recorded at the lowest it has been in two years. Lastly, sales for the fourth quarter are expected to decline for a third consecutive period.
“There are a lot of things going on right now in the business and in the world, so it can be difficult to find a single solution to all the issues,” Meta CEO Mark Zuckerberg said on the company’s earnings call on Wednesday.
Meta’s stock had a rough week, plunging 24% over the past five days. Microsoft also fell 2.6% for the week, due to a 7.7% decline on Wednesday after the company gave weak guidance for the year-end period and missed estimates for cloud revenue.
Although things were looking bleak for Amazon, which dropped 13%, there is still hope. A fourth-quarter forecast along with a dramatic slowdown in its cloud-computing unit were the main causes of the sell-off, but with a little optimism, things could start to look up again.
Although Amazon’s growth has stalled a bit, Google’s cloud group is still expanding rapidly. Google plans to continue investing in its cloud services, even though it will be slowing down its overall headcount growth in the next few quarters.
As investors look for new opportunities outside of tech, they’re finding potential in other areas of the market that haven’t been doing as well as software and internet companies. The Dow Jones Industrial Average rose 3% this week, marking the fourth consecutive week of gains for the index.