Upcoming earnings reports from huge tech companies like Apple, Alphabet, Amazon, Meta, Microsoft, and Twitter are expected to provide deeper insight into how the sector is performing under the threat of an expected recession.
Analysts predict growth of Apple, Meta, etc, will experience stagnation in the coming future
According to a new report from CNN, upcoming financial reports from big tech companies will provide a detailed look into how “bad things have gotten for their businesses amid fears of a looming recession.”
Snapchat’s parent company, which tanked much of the tech sector in May with a warning about a worsening economy, is set to report third-quarter earnings on Thursday. Apple (AAPL), Amazon (AMZN), Facebook (FB)-parent Meta, Microsoft (MSFT), Twitter (TWTR) and Google-parent Alphabet (GOOGL) will each report earnings results the following week.
“People probably should be bracing themselves for these results,” said Scott Kessler, technology global sector lead at research firm Third Bridge Group.
CNN notes that in recent weeks, Google announced that it would shut down its gaming service Stadia, Amazon said it would stop testing a home delivery robot and Meta shut down its newsletter product, Bulletin. This suggests that tech companies are moving away from experimentation with projects that are unlikely to earn them quick product returns.
Inflation continues to be the most significant factor that is affecting the revenue of big tech companies. The cost of living has increased exponentially for the global population, especially outside the United States. This makes it more difficult for big tech companies including Apple to sell their devices in countries where they might be seen as a luxury right now.
A stronger US dollar may also make hardware products from companies like Apple less affordable for foreign consumers, which, as Zino points out, is problematic given “most of these companies are generating more than half their revenue outside the United States.”
As for how tech companies are responding to the strength of the dollar, Apple recently raised the prices of old iPad models in non-US markets. Other Apple devices such as the iPhone 14 and iPhone 14 Pro have also seen a dramatic increase in price outside of the United States.
Though analysts are expecting tech companies to report reduced revenue, it is likely that Apple will fare better than its competitors. The tech giant has managed to secure significant year-over-year growth while battling production issues caused by the COVID-19 pandemic, the global chip shortage, and more.