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Highlights:
- Cloud segment revenue of Microsoft Corporation (NASDAQ:MSFT) rose 24 per cent YoY in Q1 FY23.
- Alphabet Inc. (NASDAQ:GOOG) noted a six per cent YoY growth in its Q3 FY22 revenue.
- Meta Platforms, Inc. (NASDAQ:META) revenue fell four per cent YoY in Q3 FY22.
The US market came under immense pressure in 2022, which resulted in highly volatile trading due to several macroeconomic headwinds and geopolitical concerns. However, the third quarter earnings season has so far padded support to the market.
With their positive earnings and guidance, the third quarter earnings have lifted the investors' spirits so far. However, several companies have also provided downbeat results and provided warnings due to the strong dollar, supply chain constraints, and high-interest rates.
Some of the big tech companies to reported gloomy earnings last week were Microsoft Corporation (NASDAQ: MSFT), Alphabet Inc. (NASDAQ: GOOG), Apple Inc. (NASDAQ: AAPL), Amazon.com, Inc. (NASDAQ:AMZN), and Meta Platforms, Inc. (NASDAQ:META).
The downbeat earnings are generally negative catalysts for the overall market sentiments, but last week's gloomy earnings from some of the big earnings mentioned above have lifted some investors' confidence.
The downbeat earnings indicated that Federal Reserve's aggressive stance to bring down the inflation and cooldown demand has weighed on corporate profits. So, it has raised hopes that the Federal Reserve may ease its aggressive moves in the coming months.
Let's explore the recent earnings from these technology leaders and see how the market uncertainties have reported on their profit.
Microsoft Corporation (NASDAQ:MSFT)
The technology firm that engages in consumer electronics has a dividend yield of 1.07 per cent, and its stock closed at US$ 235.87 on October 28. The consumer electronics, personal computers, and other related product manufacturers lost over 32 per cent YTD and 29 per cent YoY.
The MSFT stock touched its 52-week low of US$ 219.13 on October 13. The US$ 1.75 trillion market cap company posted its latest quarter financial results on October 25 after the market close.
The leading technology firm by market cap reported an 11 per cent YoY growth in its Q1 FY23 revenue of US$ 50.1 billion, while its net income tumbled 14 per cent YoY to US$ 17.6 billion.
Microsoft Corporation's revenue from its cloud segment rose 24 per cent YoY to US$ 25.7 billion in the quarter.
Alphabet Inc. (NASDAQ:GOOG)
Alphabet is another leading technology conglomerate firm by market cap, and engages in various businesses. The Google parent holds a market cap of US$ 1.24 trillion, and its stock Class A common stock fell over 36 per cent YTD and the same percentage annually.
The GOOGL stock touched its 52-week low of US$ 94.3836 on October 13 and reported its Q3 FY22 earnings results on October 25.
Alphabet's revenue was US$ 60.09 billion in Q3 FY22, representing a growth of six per cent on a year-over-year basis, and its diluted EPS was US$ 1.06 in the quarter, down from US$ 1.40 per share in the preceding year's same quarter.
Apple Inc. (NASDAQ:AAPL)
The US$ 2.70 trillion market cap technology company holds a dividend yield of 0.62 per cent and its stock closed at US$ 155.74 on Friday, October 28. With a P/E ratio of 25.49, the company announced its latest quarterly earnings results on October 27, after the closing bell.
Apple's revenue was up eight per cent YoY to US$ 90.1 billion in the final quarter of fiscal 2022, and its diluted EPS was US$ 1.29 apiece, a jump of four per cent YoY.
For fiscal 2022, the iPhone maker's revenue also rose the same percentage as its quarterly growth to US$ 394.3 billion, and its diluted EPS rose nine per cent YoY to US$ 6.11 per share.
The price of the AAPL stock fell over 18 per cent YTD and two per cent YoY. In October, its price surged over four per cent through last Friday.
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Amazon.com, Inc. (NASDAQ:AMZN)
Amazon.com, an e-commerce-focused technology giant, reported its Q3 FY22 earnings on the same date as Apple Inc. The AMZN stock closed at US$ 103.41 on Friday, a decline of over six per cent from its prior close.
Following the strong decline, the AMZN stock plummeted over 33 per cent YTD and 34 per cent in the last 12 months. The e-commerce giant reported a 15 per cent YoY growth in its Q3 FY22 net sales of US$ 127.1 billion. In comparison, its earnings per diluted share declined to US$ 0.28 apiece, from US$ 0.31 per diluted share in Q3 FY21.
The technology company, which also engages in the cloud and other related businesses, now expects its net sales to be between US$ 140 billion and US$ 148 billion, representing a surge of two per cent and eight per cent YoY.
Meta Platforms, Inc. (NASDAQ:META)
The social media company, Meta Platforms, holds a market cap of US$ 266.60 billion, and its stock closed at US$ 99.2 on Friday, October 28. Through October 28, the META stock fell over 70 per cent, while losing about 68 per cent YoY. It has also touched its 52-week low of US$ 122.5301 on the same date as MSFT or GOOGL stock.
The revenue fell four per cent YoY to US$ 27.71 billion in Q3 FY22, and its net income plunged 52 per cent YoY to US$ 4.39 billion. The social media firm's daily active users (DAU) rose three per cent YoY to 1.98 billion on average for September 2022.
Bottom line:
All three indices notched their weekly gains in the prior week, despite the gloomy earnings from most technology leaders. However, hopes over slower hikes after another 75 bps point hike at Fed's meeting in November have helped gains in the indices.
In addition, many companies, especially industrial firms, have reported strong earnings for the latest quarter, fuelling gains in the Dow Jones Industrial Average Index.
On the other hand, the latest GDP data of the US by the Bureau of Economic Analysis showed that the US economy advanced in the third quarter. It was the first positive growth in the US economy in the running year.
The GDP increased at 2.6 per cent annually, after two consecutive quarters of declines. This might also have eased concerns of a potential recession that the investors were anticipating.
