Tech giants are no longer impervious to the real world
Mark Zuckerberg, the founder of Meta, saw his company's stock plummet 19% on Wednesday.
From San Francisco to Seattle, the US tech industry worries with sluggish growth and uninspiring forecasts, showing that the Internet giants that seemed untouchable are being overtaken by the economic crisis and competition from new players.
This week will go down in financial earnings history as one of Big Tech's worst, if not a possible turning point, Wedbush Securities analyst Dan Ives pointed out Thursday.
< p class="e-p">Alphabet, the parent company of Google, achieved its weakest revenue growth since 2013 this summer, apart from the onset of the COVID-19 pandemic.
< p class="e-p">Amazon posted a 9% drop in third-quarter net profit and reported lower-than-expected revenue, sending its stock down 15% in post-Wall electronic trading Street Thursday.
As for Meta (Facebook, Instagram, WhatsApp, Oculus), it's a disaster, according to Dan Ives. The company's stock plunged 19% on Wednesday night, as a result of profits halving to 4.4 billion US dollars (6 billion Canadian dollars), and especially comments from Mark Zuckerberg.
The founder of the Californian group insisted during the analyst conference on his priorities, namely the artificial intelligence technologies which make it possible to recommend Reels, the advertising tools on the messaging systems and our vision for the metaverse.
“Those who are patient and invest with us will be rewarded in the end.
But the immense deployment of resources to build a parallel world, accessible through augmented and virtual realities, is attracting growing skepticism, at a time when inflation and rising inflation rates #x27;interest is eating into corporate margins.
There is no information on the revenue potential that Meta could derive from the Metaverse. No one knows, notes Insider Intelligence analyst Debra Aho Williamson.
Google is more likely to rebound quickly, because its search engine has been a bedrock of the internet for decades, for consumers and businesses alike. Its business model is not broken, she elaborates.
Faced with global economic difficulties, many advertisers have cut their marketing budgets.
< p class="e-p">We knew that global ad spend was going to contract. But I think the worst is over, nuance Tejas Dessai, analyst at Global X ETFs. And it's not going too badly, the declines remain modest given the pressure on exchange rates and inflation.
The threat embodied by TikTok, on the other hand, n& #x27;is not going away. In 2021, the entertainment app overtook Google as the most popular website in the world, according to Cloudflare.
But in terms of advertising revenue, there is no comparison, recalls Debra Aho Williamson. Industry veterans are still well ahead.
Tech companies are also suffering from an unfavorable comparison effect with 2021, when the pandemic was still greatly benefiting online services.
Only Apple has pulled out of the game, thanks to its indestructible iPhone.
We have reached a new record for our base of devices in service, said Tim Cook, the company's boss, highlighting a record number of customers who have traded in their smartphone or tablet to acquire a newer model.
The apple brand exceeded market expectations with 90 billion US dollars (122 billion Canadian dollars) in sales (+8% year-on-year) ) and US$20.7 billion (C$28 billion) in net income earned from July to September.
But the negative impact of the strong dollar is expected to increase over the holidays: We expect currency effects to have a negative impact of almost 10 percentage points on a year, warned Apple's chief financial officer Luca Maestri.
Mac revenues will decline substantially in the current quarter compared to last year, when the company released a new laptop, he said.
Amazon is also expecting lower year-end sales due to the strong dollar. The e-commerce platform predicts that they will only increase by 2-8% year-on-year.
Microsoft, for its part, still driven by cloud computing (cloud), published good quarterly results on Tuesday, but warned that x27;Azure, its remote computing platform, was expected to grow more slowly during the end of the year.