Apple, Alphabet and Amazon profits down as economic slump crimps demand

Apple's sales fell more than analysts predicted during the holiday quarter, slammed by slack purchases of iPhones and Macs

US, US economy
Photo: Bloomberg
Davey Alba, Spencer Soper and Mark Gurman | Bloomberg
3 min read Last Updated : Feb 03 2023 | 8:31 AM IST
Apple Inc., Amazon.com Inc. and Alphabet Inc., technology bellwethers with a combined market value approaching $5 trillion, posted results Thursday that show an economic slowdown is throttling demand for electronics, e-commerce, cloud computing and digital advertising — mainstays of the global tech economy.

Apple’s sales fell more than analysts predicted during the holiday quarter, slammed by slack purchases of iPhones and Macs. Amazon’s revenue was trimmed by soft consumer demand for products sold online and slowing growth in a once-booming business that provides remote computing power to companies. Alphabet’s results missed Wall Street estimates after customers curtailed orders for ads that appear alongside online search results.

“The war in Ukraine, inflationary pressures, economic uncertainty and macroeconomic headwinds kept the consumer sentiment weak in 2022 while smartphone users reduced the frequency of their purchases,” Harmeet Singh Walia, a senior analyst at Counterpoint Research, wrote in a report on Apple.


Economic weakness also affected business demand for ads and cloud computing, said Mandeep Singh, technology lead at Bloomberg Intelligence. The sluggish economy was most evident at Alphabet “as they called out advertisers pulling back, echoing what other ad vendors have said,” he said in an interview. “Cloud consumption is coming down, though growth rates are still higher there.”

Shares of all three companies slipped in after-hours trading, with Amazon falling 6.6% and Alphabet losing 6.4%. Apple slid as much as 5.6%. Nasdaq 100 futures were also lower, indicating a possible reversal of the Thursday rally led by Meta Platforms Inc., whose results emphasized cost cuts and tens of billions of dollars in share buybacks.

Each of the big tech companies reporting Thursday also underscored the ways they’re working to move past the slump. Alphabet Chief Executive Officer Sundar Pichai leaned heavily into artificial intelligence as a way to improve search results and other products. Starting this year, DeepMind, a division focused on AI research, will be included in Alphabet’s corporate costs. That will show how the technology is being incorporated into other businesses — rather than just Alphabet’s “Other Bets” division — the company said.

“I’m excited by the AI-driven leaps we’re about to unveil in search and beyond,” Pichai said in a statement.

Part of Apple’s weakness last quarter was the result of supply-chain constraints, particularly in China, where Covid-related lockdowns impeded production while also keeping consumers out of stores. Apple CEO Tim Cook said a loosening of Covid rules in China — one Apple’s biggest markets — is helping brighten his outlook.

“When you look at the opening that started happening in December, we saw a marked change in traffic in our stores as compared to November — and that followed through to demand as well,” Cook said on a conference call with analysts. Production “is now back where we want it to be,” he also said.

Amazon CEO Andy Jassy zeroed in on the company’s efforts to slash costs, reversing the massive ramp-up in hiring and spending prompted by the boom in online commerce that accompanied the pandemic.

“I think probably the No. 1 priority that I spend time on with the team is reducing our costs to serve in our operations network,” Jassy told analysts on a call.

Alphabet Chief Financial Officer Ruth Porat also told investors that the company will “meaningfully” slow the pace of hiring this year. Both companies have also announced major layoffs in recent weeks.

One subscription. Two world-class reads.

Already subscribed? Log in

Subscribe to read the full story →
Subscribe to Business Standard digital and get complimentary access to The New York Times

Quarterly Starter

₹900

3 Months

₹300/Month

SAVE 25%

Smart Essential

₹2,700

1 Year

₹225/Month

Save 46%

Super Saver

₹3,900

2 Years

₹162/Month

Subscribe

Renews automatically, cancel anytime

Here’s what’s included in our digital subscription plans

Access to Exclusive Premium Stories Online

  • Over 30 behind the paywall stories daily, handpicked by our editors for subscribers

Complimentary Access to The New York Times

  • News, Games, Cooking, Audio, Wirecutter & The Athletic

Business Standard Epaper

  • Digital replica of our daily newspaper — with options to read, save, and share

Curated Newsletters

  • Insights on markets, finance, politics, tech, and more delivered to your inbox

Market Analysis & Investment Insights

  • In-depth market analysis & insights with access to The Smart Investor

Archives

  • Repository of articles and publications dating back to 1997

Ad-free Reading

  • Uninterrupted reading experience with no advertisements

Seamless Access Across All Devices

  • Access Business Standard across devices — mobile, tablet, or PC, via web or app

Topics :Apple IncAlphabet IncAmazonUS economyUS tech giants

Next Story