A Review of Big Techs’ Earnings Results Dear Reader, Earnings results continued to roll out this week, but there were four companies’ reports Wall Street was most interested in: Alphabet, Inc. (GOOG), Microsoft Corporation (MSFT), Meta Platforms, Inc. (META) and Amazon.com, Inc. (AMZN).
Alphabet, Microsoft, Meta and Amazon are four of the “Magnificent Seven.” (Apple Inc. (AAPL), NVIDIA Corporation (NVDA) and Tesla, Inc. (TSLA) are the other three.)
These stocks were dubbed the Magnificent Seven after posting stunning gains in the first half of the year. The S&P 500 had soared 15.9% – and these stocks accounted for 73% of those gains.
They currently account for 27% of the S&P 500 and 50% of the NASDAQ 100, so naturally these stocks can impact the broader market’s performance.
Tesla released its third-quarter earnings results last week (you can read my review of its numbers here). So, in today’s Market 360, let’s dig into the tech companies’ quarterly earnings. I’ll highlight the space they’re all focusing on in the upcoming year… and how you can prosper from this industry, too. Earnings Reviews Alphabet Inc. (GOOG) – Tuesday, October 24
Alphabet bested analysts' expectations for its third-quarter earnings and sales results Tuesday evening. The company reported earnings of $1.55 per share and sales of $76.69 billion, up from earnings of $1.06 per share and revenue of $69.09 billion a year ago. Analysts were calling for earnings of $1.45 per share and $75.78 billion.
Digging a little deeper into the report… YouTube ad revenue came in at $7.95 billion, besting analysts’ estimates for $7.81 billion. Traffic acquisition costs were $12.64 billion, slightly ahead of analysts’ expectations for $12.63 billion. Although Google Cloud revenue increased 22.4% year-over-year to $8.41 billion, this fell short of analysts’ estimates for $8.64 billion.
CEO Sundar Pichai stated: I’m pleased with our financial results and our product momentum this quarter, with AI-driven innovations across Search, YouTube, Cloud, our Pixel devices and more. We’re continuing to focus on making AI more helpful for everyone; there’s exciting progress and lots more to come. President and CFO Ruth Porat also noted: The fundamental strength of our business was apparent again in Q3, with $77 billion in revenue, up 11% year over year, driven by meaningful growth in Search and YouTube, and momentum in Cloud. We continue to focus on judicious capital allocation to deliver sustainable financial value. Despite beating estimates on the top and bottom lines, GOOG shares fell about 9% as Wall Street couldn’t look past the Google Cloud revenue miss. GOOG’s fall, in turn, weighed on the S&P 500 and dragged the index down more than 1%.
Microsoft Corporation (MSFT) – Tuesday, October 24
Microsoft released its earnings report for its first quarter in fiscal year 2024 after the closing bell on Tuesday.
The company reported earnings of $2.99 per share on revenue of $56.52 billion, up from earnings of $2.35 per share and revenue of $50.12 billion. This translates to 27.2% year-over-year earnings growth and 12.8% year-over-year revenue growth. Analysts anticipated earnings of $2.65 per share on revenue of $54.55 billion, so the company posted a 12.8% earnings surprise and a 3.6% revenue surprise.
Now, one of the strongest segment performances came from Microsoft’s Intelligent Cloud platform. Its Cloud revenue increased 19% year-over-year to $24.3 billion. This topped analysts’ expectations for $23.49 billion.
The company also provided forward-looking guidance. For the second quarter, company management anticipates revenue between $60.4 billion and $61.4 billion. Analysts had estimated second-quarter revenue of $60.9 billion.
And just like most of the tech companies, Microsoft is looking to use artificial intelligence to drive future growth. Microsoft CEO Satya Nadella said: With copilots, we are making the age of AI real for people and businesses everywhere. We are rapidly infusing AI across every layer of the tech stack and for every role and business process to drive productivity gains for our customers. Following Microsoft’s earnings results, shares of MSFT climbed more than 3%.
Meta Platforms, Inc. (META) – Wednesday, October 25
Meta Platforms announced its third-quarter results Wednesday afternoon. Revenue increased 23% year-over-year to $34.15 billion and also beat Wall Street consensus estimates for revenue of $33.56 billion. This marks the fastest year-over-year revenue increase for the company since September 2021.
Meanwhile, earnings per share rose 168% year-over-year to $4.39 per share, up from earnings of $1.64 per share in the same quarter of last year. Analysts were calling for earnings of $3.63 per share.
Facebook daily active users rose 5% year-over-year to 2.09 billion, while Facebook monthly active users rose 3% year-over-year to 3.05 billion. Average revenue per user was $11.23.
However, Meta’s Reality Labs posted a $3.74 billion in operating losses, putting its total loss at about $25 billion since the beginning of last year. Reality Labs are expected to continue losing money next year.
For the fourth quarter, the company guided for total revenue between $36.5 billion and $40 billion. Analysts had anticipated fourth-quarter revenue of $38.85 billion.
During the earnings call, CEO Mark Zuckerberg commented that Meta’s biggest investment area in 2024 would be in artificial intelligence. He stated: There continues to be a ton of innovation in AI, and we used Connect to describe and start launching a lot of the new consumer AI experiences that we expect to become meaningful parts of all of our apps and our business over the coming years… We started rolling out Meta AI, our new assistant that you can access across all our messaging experiences and smart glasses to answer questions, get access to real-time information, and generate photorealistic images. We started launching our AI Studio platform that enables people to create and interact with lots of different AIs for help getting things done and just having fun. META shares fell more than 3% on Thursday following its earnings report. Amazon.com, Inc. (AMZN) – Thursday, October 26
Amazon released its third-quarter earnings results Thursday evening. For Amazon’s third quarter, it reported adjusted earnings of $0.94 per share, which came in above analysts’ estimates for earnings of $0.59 per share.
Revenue rose 13% year-over-year to $143.08 billion, which was above analysts’ projections for revenue of $141.75 billion. This compares to earnings of $0.28 per share and revenue of $127.1 billion in the same quarter of last year.
Additionally, Amazon Web Services (AWS) revenue increased 12% year-over-year to $23.1 billion, just shy of analysts’ estimates for $23.2 billion.
In the company’s earnings release, CEO Andy Jassy said: The AWS team continues to innovate and deliver at a rapid clip, particularly in generative AI, where the combination of our custom AI chips, Amazon Bedrock being the easiest and most flexible way to build and deploy generative AI applications, and our coding companion (CodeWhisperer) allowing enterprises to have the equivalent of an experienced engineer who understands all of their proprietary code is driving momentum with customers, including adidas, Booking.com, GoDaddy, LexisNexis, Merck, Royal Philips, and United Airlines, all of whom are starting to run generative AI workloads on AWS. Following its earnings results, shares of AMZN jumped more than 8%, lifting the S&P 500 and NASDAQ along with it. All Eyes on AI There was one common theme that each company brought up in regard to future growth: artificial intelligence.
But that’s no surprise given that the AI revolution has been steamrolling across the country this year.
The big tech companies recognize the impact that AI is having, with each focusing on and infusing it into their companies as they look ahead to the next quarter and even next year. And just as they see the opportunity on the horizon, I firmly believe that the AI boom we’re witnessing will be the biggest opportunity of the next decade.
To take advantage, all you have to do is apply my “Billion Dollar Tech Blueprint” to the AI market and you could turbocharge your investment portfolio in a major way.
And it will work best if you act now while the majority of AI-related stocks are still small and relatively unknown. The AI boom is just getting started and you don’t want to miss out.
That’s why I created this urgent message to share with you how my time-tested “Billion Dollar Tech Blueprint” can properly position your portfolio for the chance to make the most money possible from the AI Revolution.
Click here to watch it now. Sincerely, |
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