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Alphabet, Amazon, Apple and Facebook Report Quarterly Earnings, Beat Market Expectations

Editor, TRANSFIN.
Aug 1, 2020 10:45 AM 3 min read
Editorial

Big Tech is on a roll. Alphabet, Amazon, Apple and Facebook just reported their quarterly earnings - and each of them bested market expectations.

The results come just a day after the CEOs of these companies were grilled by the US Congress on issues ranging from anti-competitive practices to market share. There is an emerging bipartisan consensus in the US - and around the world - that Big Tech has become too big, that these companies have become monopolistic overlords at the cost of smaller players and competition.

The results the companies posted only reinforce the notion that Big Tech has become too powerful - and indispensable.

Let’s take a look at how each company fared:

As it’s clear to see, all four companies reported strong earnings, and all but one registered robust YoY growth. 

Amazon’s sales are up 40% YoY, Facebook reported a sharp uptick in EPS and Apple comfortably beat street estimates. Alphabet’s stock was the only one among the bunch to dip slightly following the news, possibly due to a drop in ad revenues, but it beat estimates nonetheless.

All in all, the four Big Tech companies reported $28.6bn in quarterly net profit and their stocks added $250bn in market cap.

Alphabet, Amazon, Apple and Facebook Report Quarterly Earnings, Beat Market Expectations

The numbers were remarkable for three main reasons.

One: Just how strong they are, and how they all beat market expectations.

Two: They come at a time when the US and world economies are struggling through a crisis of an unprecedented scale. Just yesterday, the US reported its worst GDP growth figure since the Second World War - shrinking by an annual rate of 32.9%. The fact that Big Tech has shown such resilience even as the larger economy stumbles means its market share will continue to climb.

Three: The numbers were reported right after the Congressional hearing. On Wednesday, Sundar Pichai, Jeff Bezos, Tim Cook and Mark Zuckerberg testified about their market power and business practices. 

The hearings were historic given that the Chief Executives of companies worth a combined $5trn answered questions on their practices and ethics. Political sentiment has definitely turned against these tech giants, and there is growing consent that regulations and laws need to be put in place to curb their clout.

And while their quarterly earnings do affirm that they have become too powerful - and even detached and insulated from the larger economy - the numbers also shed light on how indispensable these companies have become in our everyday lives, especially now.

Why Now?: It’s no secret that the COVID-19 pandemic and lockdowns have been a boon for tech companies. Internet usage and dependency has skyrocketed thanks to work-from-home culture, and Big Tech is benefiting bigly.

Aside from a brief stumble in March owing to supply chain disruptions, all four companies have rallied since then. 

Amazon’s e-commerce sales have swelled as offline shopping has become unavailable or unfeasible. Its cloud computing services have never been more necessary for companies eager to keep their operations running online.

Apple’s myriad of products and services are in greater demand now, helped meaningfully by work-from-home trends across the world. User engagement on Facebook and Google has soared. This has enabled these giants to offset losses in ad revenue and in-person store sales.

Amidst all this, it becomes all the more clear that regulating Big Tech is easier said than done. They’ve become intricately interwoven with our lives, and the pandemic has made this relationship harder to break.

There’s a lot of regulatory outcry about these companies, true, and a lot of it may be justified. But juxtaposed with the seemingly unstoppable domination of Big Tech, one can’t help but feel that it’s all still background noise.

FIN.

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