10/27/2022: Big Tech Missed Q3 Expectations Across the Board
Amazon and Apple Reported Q3 Earnings Today
Amazon and Apple reported Q3 earnings today after market close. Both missed some expectations. Apple beat on revenue and EPS and recorded record revenue and profits. But its iPhone sales and service revenue missed expectations. Amazon missed on revenue and AWS sales but its EPS beat expectations. Apple said the iPhone Pro demand remains strong and has not been affected by the macro environment yet. But they are currently constrained by supply chain issues. AAPL 0.00 stock price is stable(!!!) after the report. On the other hand, AMZN 0.00 stock crashed more than 10% after the report because their guided fourth quarter revenue of $140B-$144B is well below analysts’ expectation of $155B, citing changes in the macro environment.
It is quite interesting to see the two biggest consumer tech brands’ paths diverge. I suppose everyone uses Amazon to buy everything so its business trends reflect the current macro environment well while Apple is primarily selling premium products. Their target customers are richer and their spending is less affected by inflation or recession. I do wonder if Apple’s product demand will remain strong if we see a deep recession in 2023.
Overall, the big tech earnings for Q3 were not great. Everyone at least missed something and everyone’s stock tanked except for Apple. Microsoft, Google, Meta, Amazon were all seeing huge gap downs on their stock prices this past week. Interestingly, SPY 0.00 didn’t move down with them. SPY 0.00 was actually up 1.8% this past week. These 5 companies represent more than 20% of SPY’s index weight. I suppose this means non big tech stocks as a whole are performing a lot better, which is a phenomenon we haven’t seen in the past decade until now.