A series of giants Apple, Alphabet, and Amazon are ‘hurt’ because of economic instability

Share prices of all three companies fell after the earnings report.

Apple, Amazon and Alphabet – technology giants with a combined market capitalization of nearly $ 5 billion, announced business results on February 2. The data shows that the economic downturn is reducing demand for electronics, e-commerce, cloud computing and digital advertising – pillars of the global tech economy.

Apple’s sales fell more than analysts expected during the holiday period late last year, driven by slowing iPhone and Mac purchases.

Meanwhile, Amazon’s revenue fell due to weak consumer demand for products sold online. Alphabet’s results also fell short of Wall Street estimates after the company’s clients cut back on orders for ads that appear in online search results.

Harmeet Singh Walia, an analyst at Counterpoint Research, said: “Inflationary pressures and economic uncertainty have weakened consumer purchasing power in 2022, including a decrease in smartphone users’ purchasing frequency.” . According to Bloomberg, the unstable economy has affected the advertising and cloud computing needs of many businesses.

Share prices of all three companies fell after the earnings report.

Each tech giant also highlighted what measures they are taking to weather the downturn. Alphabet CEO Sundar Pichai said the company is relying heavily on artificial intelligence (AI) to improve search results and other products. “I am excited about the AI-driven leaps we are about to announce in search and beyond,” Pichai said.

As for Apple, part of the company’s weakness last quarter came from supply chain constraints, particularly in China. Apple CEO Tim Cook said that the easing of anti-Covid-19 measures in China – one of Apple’s largest markets, is helping the company’s business situation improve.

“We saw a marked shift in store traffic in December 2022 and with it consumer demand. Production has also been restored,” Tim Cook said in a meeting with analysts.

Amazon CEO Andy Jassy said management is focusing on efforts to cut costs and reverse the massive hiring situation caused by the explosion of online commerce during the pandemic. “I think maybe my number one priority right now is to reduce costs in the company’s network,” Jassy told analysts.

Alphabet’s CFO Ruth Porat also told investors that the company will “significantly” slow down its hiring pace this year.

Recently, both Alphabet and Amazon have laid off a series of employees to cut costs. Meanwhile, Apple still seems to be the only tech giant that hasn’t made a similar move so far.

Source: Bloomberg