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Not 'A' rated earnings from Amazon, Apple & Alphabet

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It’s been a busy week of earnings and central bank decisions. Ahead of today’s crucial US employment data, three US tech giants reported earnings. The reports weren’t disastrous, but they weren’t exactly encouraging either…

Let’s start with Apple:


The post market confusion is especially evident. Down, up and then down again. Perhaps the most important takeaway was that this is the first time Apple has missed analyst holiday sales estimates since 2015.

The holiday season is usually their busiest sales period of the year. It was widely known that production had been disrupted, so this was surely factored into analyst expectations. Nevertheless, revenue fell 5.5% for the quarter, down to $117.2 billion, and below average estimates of $121.1billion.

Sales of iPhones, wearables and Mac computers missed estimates, while iPad sales and services beat. Here’s the full breakdown:

  • Q1 Revenues. $117.15b, Est. $121.14b
  • Q1 Earnings Per Share $1.88, Est. $1.94
  • Q1 iPhone Revenue $65.77bn, Est $69.17bn
  • Q1 Mac Revenue $7.74bn, Est. $9.72bn
  • Q1 Wearables, Home & Accessories $13.48bn, Est. $15.32bn
  • Q1 Services $20.77bn, Est $20.35B
  • Q1 Pad Revenue $9.40b, Est. $7.78b
  • Q1 Greater China Rev. $23.91b, Est. $21.8b

Apple CEO Tim Cook implied that the production challenges were the culprit for the weaker iPhone sales, saying “we believe iPhone would have grown during the quarter had it not been for the supply shortages”.

Which is at odds with the general smartphone trends, as detailed in the latest Canalys report: Worldwide smartphone shipments fall for fourth consecutive quarter, leaving market down 12% in 2022.

Cook confirmed that “production is now back where we want it to be”, so barring any surprises, it’s a question of whether demand is holding up.

Amazon saw a similar reaction to their report.


Amazon actually lost money in 2022, reporting a net loss of $2.7 billion for the year. On paper, it’s their worst year on record. However, much of this is explained by the decline in value of their Rivian holdings, and the restructuring of the organisation:

CFO Brian Olsavsky explained:

The operating income was negatively impacted by 3 large items, which added approximately $2.7 billion of costs in the quarter. This was related to employee severance, impairments of property and equipment and operating leases and changes in estimates related to self-insurance liabilities.

The declining growth of Amazon Web Services is also a concern. The cloud segment grew at 20%, down from 27.5% growth in the prior quarter. Olsavsky’s comments imply a further slowdown ahead:

Our customers are looking for ways to save money, and we spend a lot of our time trying to help them do so. This customer focus is in our DNA and informs how we think about our customer relationships and how we will partner with them for the long term.

As we look ahead, we expect these optimization efforts will continue to be a headwind to AWS growth in at least the next couple of quarters. So far in the first month of the year, AWS year-over-year revenue growth is in the mid-teens.

These comments echoed the sentiment of cloud rivals Microsoft. Growth is slowing…

And it’s a similar story for Google/Alphabet. That same negative whipsaw pattern:


Revenues from Google’s advertising business, which includes Search and YouTube, dropped from £52bn to £48bn. Shares in the company fell by more than 5% in after-hours trading.

Revenues and earnings both missed estimates, but YouTube advertising revenues were a big disappointment, coming in at $7.96 billion vs. $8.25 billion that the street expected.

The picture’s becoming increasingly murky. It’s worth asking if bad news for the economy will continue to be seen as good news for the stock market. If the market fears that employment and wages are turning negative, bad news could simply become bad news again.

Not investment advice. Past performance does not guarantee or predict future performance.

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