The broader technology market is facing an important test with the world’s most valuable major US technology companies announcing their quarterly results, while markets await the Federal Reserve’s decision today on the level of interest rate hike.
Rising inflation, rising interest rates and fears of a recession have hurt the technology sector.
Among the large group of companies, Meta has suffered the most. It has lost half its value as the faltering advertising business on Facebook is not yet showing signs of recovery.
Today, investors are waiting for Meta to reveal its profits, amid expectations that the company may surprise traders with declining profits once again.
According to Bloomberg, as of July 20, 31 analysts have provided their estimates of Meta’s upcoming results for the second quarter of 2022. Total sales are estimated between $27.68 billion and $30 billion, with an average estimate of $29.05 billion.
And when Meta releases the second-quarter numbers, Wall Street will be looking closely for signs that growth is about to return. Investors also need to see improved trends when it comes to users who have fled the company’s apps in recent quarters in favor of competitors like TikTok.
Meanwhile, Meta continues to spend billions of dollars creating metaverses, a digital world that people can access using virtual reality and augmented reality glasses.
On Thursday, the earnings releases of Apple and Amazon are expected.
Microsoft
Microsoft Corporation announced Tuesday its fourth-quarter financial earnings, defying investors’ expectations. The company also missed expectations on all of its important smart cloud businesses.
Here are the most important numbers from the announcement compared to what Wall Street was expecting, as compiled by Bloomberg.
-Revenue: $51.9 billion versus $52.4 billion expected.
-Earnings per share: $2.23 versus $2.29 expected.
-Productivity and commercial operations: $14.4 billion, compared to an expected $16.7 billion.
-Smart Cloud: $20.9 billion versus $21.1 billion expected.
-More Personal Computing: $14.4 billion vs. $14.7 billion forecast
The company cited a number of factors that affected its financial results, including the war in Ukraine, the unfavorable foreign exchange environment, and the prolonged COVID lockdown in China.
Microsoft also noted that advertisers were spending less money, which affected LinkedIn’s search business and professional network.
“As a new fiscal year begins, we remain committed to balancing operational discipline with continued investments in key strategic areas to drive future growth,” Microsoft Chief Financial Officer Amy Hood said in a statement.
Despite the failure in the company’s intelligent cloud business, Microsoft said revenue for Azure and other cloud services rose 40 percent year-over-year.
Earlier this month, Microsoft moved to lay off less than 1 percent of its workforce. The company also announced that it is slowing down the hiring process in the future.
Alphabet
The report of the American technology company Alphabet also showed that the second-quarter profit came in below analyst expectations, as the company recorded less revenues than expected.
Earnings per share amounted to $1.21, while revenues were recorded at $69.69 billion. Market opinion polls had expected earnings per share to reach $1.28 and company profits to reach $70.04 billion.
