The last two weeks have been a rollercoaster for the markets, with significant declines across major indices. The S&P 500 has dropped by 5.6%, the Nasdaq-100 by 9.5%, and the Russell 2000 by 3.8%. For long-term investors, this volatility can be challenging, but it’s essential to stay the course and continue dollar-cost averaging into the markets. This article reviews key earnings announcements from major tech giants and their implications for investors.
Key Earnings Announcements:
Below are the key earnings announcements of the past week.
Microsoft (MSFT):
- Revenue: $64.7 billion, +15% YoY
- Operating Income: $27.9 billion, +15% YoY
- Profits: $22.0 billion, +10% YoY
- Earnings Release Callout: “We closed out our fiscal year with a solid quarter, highlighted by record bookings and Microsoft Cloud quarterly revenue of $36.8 billion, up 21% year-over-year.
- Takeaway: Microsoft’s earnings exceeded expectations, driven by gains across multiple business segments, particularly the Intelligent Cloud. However, slightly lower-than-expected Azure revenue growth (29% vs. 31% expected) led to a stock dip. The company’s focus on AI and cloud services continues to drive growth, with Azure AI Services now at a $5B+ annual run rate.
Meta Platforms (META):
- Revenue: $39.1 billion, +22% YoY
- Operating Income: $14.8 billion, +58% YoY
- Profits: $13.5 billion, +73% YoY
- Earnings Release Callout: “We had a strong quarter, and Meta AI is on track to be the most used AI assistant in the world by the end of the year.
- Takeaway: Meta’s impressive earnings growth is fueled by its robust AI initiatives and strong performance across its apps. The company is set to dominate the AI space with significant traction in AI-powered products and services.
Apple (AAPL):
- Revenue: $81.8 billion, -1% YoY
- Operating Income: $21.8 billion, -3% YoY
- Profits: $19.4 billion, -3% YoY
- Earnings Release Callout: Our Services business segment continues to show remarkable growth, boasting 74% gross margins.
- Takeaway: Despite a slight decline in revenue and profits, Apple’s Services segment remains a bright spot with high margins. The company’s focus on expanding its services could offset hardware sales fluctuations.
Amazon (AMZN):
- Revenue: $134.4 billion, +9% YoY
- Operating Income: $5.7 billion, +40% YoY
- Profits: $6.7 billion, +54% YoY
- Earnings Release Callout: Amazon is becoming an AWS + Advertising business.
- Takeaway: Amazon’s strong earnings are driven by its AWS and Advertising segments. AWS continues to be a critical growth driver, while advertising revenue growth highlights the company’s diversification efforts.
Positive Implications for Investors:
Below are the positive implications for investors.
Microsoft
- Continued revenue growth driven by cloud and AI services.
- Strong commitment to AI integration and expansion.
Meta Platforms
- Significant growth in revenue and profits.
- Leading position in AI development and applications.
Amazon
- Robust growth in AWS and Advertising segments.
- Diversification reducing reliance on retail sales.
Apple
- High margins in the Services segment.
- Strategic focus on expanding services to maintain profitability.
Negative Implications for Investors:
Below are the negative implications for investors.
Microsoft
- Slight miss in Azure revenue growth expectations.
- Increased capital expenditures due to AI and cloud demand.
Meta Platforms
- High reliance on AI advancements for future growth.
- Competitive pressures in the AI space.
Amazon
- Potential over-reliance on AWS and Advertising for growth.
- Retail segment growth slowing down.
Apple
- Decline in overall revenue and profits.
- Heavy dependence on the Services segment to offset hardware sales.
Conclusion:
The past week has brought a mix of positive and negative earnings announcements from major tech companies. Microsoft, Meta, Amazon, and Apple all showed strengths in different areas, with significant implications for their stock prices. For long-term investors, it’s crucial to focus on the overall growth potential of these companies and continue to invest strategically, despite short-term market volatility.
Muzzammil is a content writer at Stock Target Advisor. He has been writing stock news and analysis at Stock Target Advisor since 2023 and has worked in the financial domain in various roles since 2020. He has previously worked on an equity research firm that analyzed companies listed on the stock markets in the U.S. and Canada and performed fundamental and qualitative analyses of management strength, business strategy, and product/services forecast as indicated by major brokers covering the stock.
