Risks Including Delta Variant Spread and Semiconductor Supply Shortage
Minimal Stock Price Change Despite 'Surprise Earnings'
[Asia Economy Reporter Kim Suhwan] While major U.S. IT companies such as Apple, Microsoft (MS), and Alphabet (Google's parent company) posted earnings surprises in the second quarter, concerns are emerging that their future growth rates may slow down.
On the 28th, Bloomberg reported, "Investors see a low likelihood that Apple, MS, and Alphabet will achieve double-digit growth in the future as they did in the second quarter," adding, "The minimal stock price fluctuations following these companies' earnings announcements further confirm this."
Earlier, Apple announced on the 27th (local time) that its second-quarter revenue (Apple's own fiscal third quarter) reached $81.41 billion (approximately 94 trillion KRW), a 36% increase compared to the same period last year. This exceeded Wall Street's estimate ($73.3 billion) by about 11%.
Alphabet also recorded second-quarter revenue of $61.88 billion (approximately 71.4095 trillion KRW), a 62% increase year-over-year. This significantly surpassed Wall Street's estimate of $56.16 billion.
MS's second-quarter revenue (MS's own fiscal fourth quarter) was $46.15 billion (approximately 53.2571 trillion KRW), a 21% increase compared to the same period last year, exceeding market expectations ($44.24 billion). Operating profit rose 42% year-over-year to $19.1 billion.
Furthermore, despite Apple and MS both achieving explosive growth rates with market capitalizations exceeding $2 trillion, Bloomberg reported that experts and investors foresee a contraction in their growth momentum.
A Bloomberg analyst stated, "It will be difficult for these companies to record double-digit growth next year at levels similar to this year," adding, "Compared to the rapid growth seen this year, the difference in growth rates is expected to become even more pronounced."
Apple specifically noted in its earnings announcement on the 27th that semiconductor supply shortages are expected to negatively impact iPhone and iPad sales in the third quarter.
Bloomberg also reported that the recent spread of the Delta variant virus is another factor heightening investor concerns amid these forecasts.
Alphabet stated in its second-quarter earnings report, "It is too early to provide a long-term earnings outlook," and expressed concern that "recent signs of a resurgence of COVID-19 are worrisome."
Additionally, the rapid stock price increases these companies have experienced this year have significantly reduced the potential for further gains, which is also cited as a factor contributing to the anticipated slowdown in growth.
So far this year, Apple’s stock has risen 11%, while Alphabet and MS have surged 51% and 29%, respectively.
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