Alphabet, Amazon and Apple results: tech enters the era of frugality

Affected by the global economy faltering to the point of having to lay off thousands of people, the tech giants seem to be entering the era of frugality, promising cost cuts to reassure markets after years of unbridled growth.

Alphabet (Google), Amazon and even Apple all three published quarterly results or outlooks on Thursday, February 2, which disappointed: the market was hoping for more resistance to the economic crisis.

iPhone sales down

Apple, the only major company in the sector that did not launch a social plan this winter, suffered a rare contraction in sales of its flagship iPhone, down more than 8% year on year, for the period from October to December.

Its turnover stood at 117 billion dollars (- 5.4% over one year) and its net profit at less than 30 billion (- 13%), two results below expectations.

Tim Cook, the boss of the apple brand, attributed these poor performances to currency effects and especially to supply problems, due to disruptions at the Zhengzhou site (China), the largest iPhone production plant. .

Amazon Exceeds Expectations

Amazon, for its part, exceeded expectations (those of the market and its own) with revenues of $149.2 billion in the fourth quarter of 2022. But this was not the time for celebration.

The online sales platform made a cautious forecast for the current quarter while boss Andy Jassy mentioned in a press release the “encouraging progress in terms of cost reductions” and an “short-term uncertain economy”.

Meta revenue fell for the first time

Mark Zuckerberg, the boss of Meta (Facebook, Instagram), had announced the color on Wednesday, promising that 2023 would be “the year of efficiency”. He clarified on the analyst conference call that Meta was looking to “withdraw certain intermediate management positions to speed up decision-making”.

In 2022, the social media giant’s advertising revenue fell for the first time since it went public in 2012. And its quarterly net profit was halved to $4.65 billion.

Meta and Google, which represent 50% of the global digital advertising market, suffer from the same ills: advertisers are spending less because of inflation, TikTok is fiercely competing with them and regulatory changes have limited their ability to collect data. users to sell ultra-targeted advertising space.

Google’s advertising revenue down

Alphabet’s quarterly revenue fell slightly to $76 billion and its net profit fell 34% to $13.6 billion. And the YouTube platform collected less than $8 billion in advertising revenue (-7.8% year-on-year).

“Google ended the year in a very different position than a year ago”commented Insider Intelligence’s Evelyn Mitchell. “Its advertising revenue is down for the second time in Google’s history, the first being in the second quarter of 2020”at the start of the pandemic. “Search engine advertising is usually not exposed to the vagaries of the market (…), this does not bode well for this industry”underlined the analyst.

Snapchat, Meta and Google are struggling to generate as much profit as before as they continue to win over users. Snapchat now has 375 million daily users, 17% more than at the end of 2021. Facebook, which seemed to be losing momentum, reached two billion daily active users.

Artificial intelligence

To regain their margins, companies rely on artificial intelligence (AI), personalized recommendation algorithms with ever finer advertising targeting, with ever less data.

The bosses have also all expressed their enthusiasm for the advent of generative AI, which has unleashed passions since the release this fall of ChatGPT. This software from the OpenAI start-up, financed in particular by Microsoft, can write all kinds of texts and lines of computer code on request.

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J. A. Allen

Author, blogger, freelance writer. Hater of spiders. Drinker of wine. Mother of hellions.

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