Tech giants are being exhausted by inflation and deficits – rts.ch

The US tech giants, which have soared during the pandemic, have been overtaken by inflation, deficits, competition and regulators. These are all challenges that will mark their year 2022.

Google, Meta and Apple for Silicon Valley, Microsoft and Amazon, neighbors of Seattle, all released their quarterly results this week.

Their sales of several tens of billions of dollars remain impressive and more or less in line with market expectations. But the economic situation, linked to the health crisis and the war in Ukraine, is weighing on their growth and prospects.

Amazon disappoints investors

Amazon is disappointing investors with weaker-than-expected sales forecasts for the current quarter: between $116 and $121 billion, rather than the $125 billion projected according to the consensus of analysts FactSet.

Chief financial officer Brian Olsavsky on Thursday estimated additional costs for the first three months of the year at $6 billion, mainly due to lost productivity, inflation and labor costs. During the pandemic, the online retail giant doubled its workforce to 1.62 million employees worldwide.

The stock fell about 9% in electronic trading after the stock market closed.

Single-digit growth for Apple

Apple also saw its growth slow from January to March, as expected. Quarterly sales reached $97.2 billion, up 9% year over year. It is the first time since the summer of 2020 that Apple has shown single-digit growth.

>> Read: Apple exceeds $3 trillion in market cap

The Cupertino group has so far managed to mitigate the supply problems affecting the entire electronics sector, especially in the semiconductor industry. But the disruption caused by the resurgence of coronavirus cases should deprive it of $4 to 8 billion in revenue for the current quarter, group leaders announced on Thursday.

Alphabet and Meta dependent on advertisers

For Alphabet (Google, YouTube) and Meta (Facebook, Instagram), the two leaders in online advertising, the unfavorable economic context means advertisers are managing their budgets more carefully.

>> Read: Falling profits for Google and YouTube disappointing towards the end of the pandemic

And many of them are attracted by the star TikTok, the application of short, musical and funny videos, ultra popular among young people.

The two California companies have assured that their short video formats, copied from TikTok, are doing well in terms of audience and that they are actively working on monetization. The “YouTube Shorts” are now generating “more than 30 billion daily views, four times more than a year ago,” Alphabet boss Sundar Pichai welcomed.

“Our move to short formats isn’t generating any substantial revenue at this point, but we’re optimistic,” assured Meta founder Mark Zuckerberg. “It will take several years,” said Sheryl Sandberg, director of operations.

A “post-pandemic hangover”

According to eMarketer analyst Paul Verna, we may be witnessing a “post-pandemic hangover.” The big tech companies have “admitted, not celebrated, but the health crisis has given their business a huge boost,” he explained. “That kind of growth can’t last.”

Google’s parent company made a profit of $16.4 billion in the first quarter, 8% less than a year ago.

Meta, for its part, released a better-than-expected net profit, $7.47 billion, but down 21% over a year. The social networking giant, which plunged into the stock market early this year after losing users on Facebook for the first time, won slightly this time around.

>> See the topic of the Geopolitis show:

Facebook/Meta grows despite competition from Chinese TikTok / Geopolitis / 3 min. / January 30, 2022

Approximately 3.64 billion people worldwide use at least one of the group’s platforms (Facebook, Instagram, Messenger, WhatsApp) every month.

Saved the cloud domain

However, one sector of activity is resisting current restrictions, driven by the habits adopted during the pandemic, from telecommuting to entertainment and online shopping: the cloud.

Azure, Microsoft’s third-party computing platform, grew 46% in a year, the same as in the previous quarter.

AWS, an Amazon service, generated revenue of $18.4 billion in the first quarter (+36% year-over-year). It is the market leader with 33% of global cloud spending at the end of 2021, ahead of Microsoft (22%) and Google Cloud (9%), according to research firm Canalys.

>> Read: Amazon’s Shares Rise After a Final Quarter Driven by the Cloud

These five groups will also face recently passed European laws, which aim to regulate the practices of US technology leaders.

dpa/oang

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