US big tech results are confusing investors
US Big tech results are out and the results generally aren't inspiring.
While the common reason is to blame Russia, I think there are more important factors such as lapping the exceptional results achieved during Covid and the risk of stagflation (high inflation, low growth) that cause the results to be a mixed bag.
Let's look at the revenue growth first, which have declined across the board:
Alphabet +23%
Microsoft +18%
Apple +9%
Amazon +7%
Meta +7%
And the un-corresponding changes in share price 1 day price after results were release:
Meta +18%
Microsoft +5%
Apple -2%
Alphabet -4%
Amazon -9% (after market hours)
It is confusing to look right? Meta grew the slowest but the share price jumped 18% while Alphabet grew the fastest and saw a 4% drop in the share price.
Of course one would argue that it isn't just about revenue growth and there are other metrics to look at. One of which is whether the numbers meet expectations or not.
For $Alphabet-C(GOOG.US$ Alphabet, both revenue and earnings missed the consensus target. Youtube revenue missed the estimates by the most, 9% below the target. Although Google Cloud beat the estimates by growing 44%, the unit continue to incur losses.
$Meta Platforms(FB.US$ Meta didn't beat the revenue estimates but the earnings were higher than expected. After seeing a decline in monthly active users in the last quarter that caused the big drop in share price, Meta reported a rebound.
But a 7% growth is the slowest in Meta's history as a public company and the investment in metaverse reported another $3b loss. Yet, share price jumped 18%.
$Microsoft(MSFT.US$ Microsoft's results vs share price movements were more in line. Both revenue and earnings beat estimates. Azure Cloud grew 46%, Productivity and Business Processes (Office, LinkedIn) was up 17%, and Personal Computing (Windows, Xbox, Surface) grew 11%. Good results across the board and share price went up.
$Amazon(AMZN.US$ Amazon's 7% growth is the slowest since the dot-com bust. What's worse is that the growth is expected to slow further, between 3% and 7%. While the ad revenue was impressive in the previous quarter, it disappointed in 1Q2022 by missing the expectation by 4%. Nevertheless it grew faster than Google and Facebook ads.
Apple $Apple(AAPL.US$ beat estimates on all counts except for Other Products (AirPods, AppleTV etc). Growth achieved in all product and service lines. Even iPhone, an already large revenue contributor, still managed to grow 6%. The results are similarly resilient as Microsoft's, but Apple share price dipped.
The whole big tech results and how the market is reacting to them is confusing.
It felt like analysts were just finding plausible sounding reasons to explain the situations. A lot of nitpicking of details without consistency. No one can prove or disprove why share price moved up or down.
So I say don't pay so much attention to these noises. Look long term as the fate of a company is not decided by one or two quarters' results.
While the common reason is to blame Russia, I think there are more important factors such as lapping the exceptional results achieved during Covid and the risk of stagflation (high inflation, low growth) that cause the results to be a mixed bag.
Let's look at the revenue growth first, which have declined across the board:
Alphabet +23%
Microsoft +18%
Apple +9%
Amazon +7%
Meta +7%
And the un-corresponding changes in share price 1 day price after results were release:
Meta +18%
Microsoft +5%
Apple -2%
Alphabet -4%
Amazon -9% (after market hours)
It is confusing to look right? Meta grew the slowest but the share price jumped 18% while Alphabet grew the fastest and saw a 4% drop in the share price.
Of course one would argue that it isn't just about revenue growth and there are other metrics to look at. One of which is whether the numbers meet expectations or not.
For $Alphabet-C(GOOG.US$ Alphabet, both revenue and earnings missed the consensus target. Youtube revenue missed the estimates by the most, 9% below the target. Although Google Cloud beat the estimates by growing 44%, the unit continue to incur losses.
$Meta Platforms(FB.US$ Meta didn't beat the revenue estimates but the earnings were higher than expected. After seeing a decline in monthly active users in the last quarter that caused the big drop in share price, Meta reported a rebound.
But a 7% growth is the slowest in Meta's history as a public company and the investment in metaverse reported another $3b loss. Yet, share price jumped 18%.
$Microsoft(MSFT.US$ Microsoft's results vs share price movements were more in line. Both revenue and earnings beat estimates. Azure Cloud grew 46%, Productivity and Business Processes (Office, LinkedIn) was up 17%, and Personal Computing (Windows, Xbox, Surface) grew 11%. Good results across the board and share price went up.
$Amazon(AMZN.US$ Amazon's 7% growth is the slowest since the dot-com bust. What's worse is that the growth is expected to slow further, between 3% and 7%. While the ad revenue was impressive in the previous quarter, it disappointed in 1Q2022 by missing the expectation by 4%. Nevertheless it grew faster than Google and Facebook ads.
Apple $Apple(AAPL.US$ beat estimates on all counts except for Other Products (AirPods, AppleTV etc). Growth achieved in all product and service lines. Even iPhone, an already large revenue contributor, still managed to grow 6%. The results are similarly resilient as Microsoft's, but Apple share price dipped.
The whole big tech results and how the market is reacting to them is confusing.
It felt like analysts were just finding plausible sounding reasons to explain the situations. A lot of nitpicking of details without consistency. No one can prove or disprove why share price moved up or down.
So I say don't pay so much attention to these noises. Look long term as the fate of a company is not decided by one or two quarters' results.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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