Thursday afternoon will cap off what has been an earnings season so far for the big tech giants.
After years of booming profits thanks to strong demand for tech gadgets and services during the pandemic, the industry’s fortunes began to turn last year. Tech companies are battling high inflation and interest rates, as well as increased competition and declining demand in the consumer and digital advertising markets.
Alphabet, Amazon and Apple are set to report earnings after the bell on Thursday and all eyes will be scrutinizing the results to see how those challenges affected the crucial December quarter.
Wall Street doesn’t look too optimistic.
What to expect: Apple is expected to report its first quarterly revenue decline since 2019 — down 2% from the same period last year. Alphabet’s revenue will likely be flat from last year, and Amazon’s sales are expected to grow just 6 percent year-over-year. All three companies’ profits are expected to decline from the year-ago quarter, with Amazon suffering the biggest decline with a 40.6 percent decline.
Thursday’s reports are likely to be another sign that tech companies are no longer as immune to economic swings as they once were. “Apple proved more resilient than its big tech peers last quarter, but this earnings season could be tougher,” Joshua Warner, market analyst at investment firm StoneX, said in a statement earlier this week. ” Most of Amazon’s businesses, he said, “are finding it difficult to grow even in these tough economic conditions, and Amazon has already warned that it will post the lowest revenue growth of any holiday shopping season. “
Several major tech firms, including Microsoft, Google, Meta and Amazon, have announced plans to lay off tens of thousands of workers in recent months. (Apple, so far, has been a major exception to this trend). Thursday’s reports should give Amazon and Alphabet shareholders a glimpse into how soon the tech companies will realize the benefits of those cost cuts — and if they will be enough for the uncertain period ahead.
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