Three of Silicon Valley’s biggest companies released disappointing financial results on Thursday, compounding concerns about a slowdown in the tech sector.
Recession fears have hit both business and consumer spending globally, leading companies like Apple, Alphabet and Amazon to signal a tough recovery from their 2021 highs.
Alphabet, the parent company of Google, reported low quarterly revenues as digital advertising spending was curtailed amid economic uncertainty.
Revenue from Google’s advertising business, which includes Search and YouTube, fell from £52bn to £48bn. Shares of the company fell more than 5% in after-hours trading.
Last month, Alphabet announced that 12,000 workers would be laid off globally.
The “difficult news” about job losses – about 6% of the total workforce – was revealed by Alphabet chief executive Sundar Pichai in an email to employees.
Similarly, Apple missed sales and profit targets in the recent quarter, hampered by manufacturing issues and lower demand for the company’s flagship iPhone.
The company’s sales fell 5% to £95 billion and were down in all product categories except iPads and services, which saw modest growth.
Apple also missed its first Wall Street earnings forecast since 2016, with earnings per share of £1.54 against analyst estimates of £1.59 per share.
Read more:
Apple’s value falls as interest rates, supply problems and recession fears hit the tech industry
Meta reveals 55% drop in profits after mass layoffs
Fears over Google jobs in UK and Ireland as parent company cuts 12,000 employees globally
But there has been a silver lining for the company: Chief Executive Tim Cook said production is now “back to where we want it to be” after the easing of China’s zero-COVID policies.
Meanwhile, e-commerce giant Amazon reported a strong quarter for the holiday period but sounded a warning about the pace of growth of its critical cloud computing division.
The company, which cut 18,000 jobs in early Januaryit defied Wall Street expectations and reported £121 billion in revenue, a 9% jump on the same period last year.
It also forecast that sales for the current quarter would be in line with analyst estimates.
But more worryingly, Amazon’s longstanding profit engine has started to show signs of a sharp slowdown.
Amazon Web Services sales growth has slowed to 20% in the past three months, the slowest rate of expansion since the company began publishing numbers on the division.
After exploding in popularity during the pandemic and hiring an estimated 800,000 more workers, current CEO Andy Jassy has sought to slash spending, slashing non-essential company arms and slowing hiring, after the stock price of Amazon was down nearly 50% last year.
The decline has wiped out around £678 billion from the company’s market valuation.
