Most of the tech giants gained some ground on Friday thanks to Apple’s relatively healthy performance. But overall the mood remained gloomy.
Hundreds of different data points are shared with the market. Together, they tell a story of sectors hit by the “green” boom, supply chains in their third year in a row, inflation out of control, and economic growth indicators that look increasingly bleak. We’ve broken it all down into 10 charts – be sure to tell us what we missed.
The semiconductor industry’s malaise can best be summed up by the debacle at Intel Corporation, the largest US chip maker. As a supplier of computer and server components, Intel has been hard hit by the slowdown, and is trying hard to reverse the slowdown despite vowing to catch up with rivals Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Corp. But the cost reduction will not come. It’s time to help with the fourth season numbers.
A year ago, chips were in short supply around the world, and suppliers were rushing to buy equipment and ramp up production. Last month, they cut the 2022 budget by more than $16 billion, preparing to cut spending next year.
A recurring theme in this quarter’s earnings was the impact of the U.S. dollar’s appreciation against nearly all currencies. Amazon.com Inc. hit hardest, few companies are immune.
Apple Inc. looks relatively strong compared to others. His iPhone worked pretty well, but as you can see below, it only lasted a few days. The services, which include Apple Music and Apple+ TV, the company’s second-largest contributor to revenue, continued to show steady growth, albeit at a slower pace than the previous quarter.
Meta Platforms Inc is being hit from all angles. The owner of Facebook, Instagram and WhatsApp has been hit hard by changes to Apple’s privacy rules, which make it harder to track users through apps and drive down ad prices. The global recession, including high inflation, is adding to the woes. While the number of users is slowly increasing, its family of apps has 3.7 billion monthly active users, but the average revenue per person is falling.
Meanwhile, the social media company is burning cash in its Reality Labs division — the metaverse behind founder Mark Zuckerberg’s virtual reality and name change last year. The business has lost more than $20 billion to date, and Zuckerberg told investors he expects the shortfall to continue for some time.
Alphabet Inc. not doing very well, but at least it’s growing. Third-quarter revenue rose 6.1%, the slowest growth since June 2020 following the Covid-19 pandemic. Google’s search-based advertising division is outpacing its network division and its YouTube video service, while its cloud services are holding steady.
Microsoft, whose revenue has shifted over a decade from directly tied to customer computing sales of PC and server hardware, is helping to weather the storm better than most. September revenue rose just 11%, the lowest in five years, but that’s still better than most tech times. Cloud and productivity offerings are the main reason for this relative strength. Customers, both consumer and corporate, are somewhat wedded to the Office suite of products, while those who sign up for the Azure cloud service have no escape when the going gets tough.
The final two charts show how investors reacted to all this news. Stock market crashes are a global, cross-sector phenomenon. However, the tech sector fared worse, with the Nasdaq down 30% from a year ago.
Companies that rely heavily on advertising or short-term consumer purchases suffer the most. Money appears to be shifting to more defensive tech stocks, with Netflix Inc. shining brightest among them.
If there’s any consolation, it’s that investors are no longer worried about Twitter Inc’s fortunes. This is Elon Musk’s problem.
From other writers at Bloomberg Opinion:
• The law of chips does not work without a part of each chip: Thomas Black
• Bankrupt Airbnb hosts have 3 options: Teresa Gilarducci
• Tech Investors Overreact Like Yelling at the Cloud: Tim Kulpan
This column does not necessarily reflect the views of the editorial board or Bloomberg LP or its owners.
Tim Kulpan is a Bloomberg technology columnist covering Asia. Previously, he was a technology reporter for Bloomberg News.
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