[Asia Economy New York=Special Correspondent Joselgina] Apple, Amazon, and Alphabet, the so-called 'Triple A,' experienced a rollercoaster ride on the 2nd (local time), swinging between sharp rises and falls. Right after closing the regular session with gains fueled by the big tech rally, they all slid in after-hours trading. The market's disappointment over the earnings reports released immediately after the market close was the background for this.
On this day in the New York stock market, the three companies known as Triple A all closed the regular session with gains. Expectations grew that the U.S. Federal Reserve (Fed) would soon halt its interest rate hike cycle, and Facebook's parent company surged more than 23%, fueling the big tech rally in the New York stock market. Meta soared 23.28% on the day, buoyed by better-than-expected strong earnings and news of a $40 billion share buyback. Apple, which was about to release its earnings, rose 3.71% compared to the previous session on the back of Meta's positive news. Alphabet and Amazon also closed trading up 7.28% and 7.38%, respectively. The Nasdaq index, which is tech-stock heavy, also rose more than 3%.
However, the market mood changed as these big tech companies' earnings were released immediately after the market close. As of 7:45 p.m. Eastern Time, the Triple A were all recording declines of 3-4% in after-hours trading.
Apple, the largest by market capitalization, recorded a quarterly revenue decline for the first time since 2019. This marked the end of 14 consecutive quarters of revenue growth that had continued through the third quarter of last year. Fourth-quarter revenue was $117.15 billion, down 5.49% year-over-year, falling short of Wall Street expectations. iPhone sales shrank by 8.2%, and Mac sales contracted by 28.7%. The spread of COVID-19 in China and resulting production disruptions at Foxconn's factory in the fourth quarter of last year were seen as direct blows. Apple CEO Tim Cook explained, "The strong dollar, production issues in China affecting the iPhone 14 Pro and iPhone 14 Pro Max, and the overall macroeconomic environment had an impact."
Alphabet, Google's parent company, also was hit by a digital advertising business setback, posting earnings per share (EPS) of $1.05. Wall Street had expected $1.88. This was the first time since the second quarter of 2020, early in the pandemic, that Alphabet's advertising revenue declined. YouTube advertising revenue was $7.92 billion, falling short of the expected $8.25 billion. There is a growing consensus that the digital advertising business is contracting more sharply than initially anticipated. Facing a new AI competitor called Chat GPT, Google expressed caution during the conference call. CEO Sundar Pichai announced that Google plans to publicly release some of its most powerful AI models, including LaMDA, within a few months. He emphasized, "We have reached an AI inflection point," and "AI is the deepest technology we are researching."
Amazon's quarterly revenue met expectations, but growth in its cloud computing business slowed, leading to investor disappointment. Amazon Web Services (AWS) saw its revenue growth rate shrink from 40% to 20%, the lowest growth rate since AWS began reporting. Operating profit also fell short of projections. CEO Andy Jassy said, "The economic environment is uncertain in the short term," adding, "We are working very hard on cost efficiency while also ensuring we do not give up on long-term investments for broad customer experiences." This was Jassy's first time participating in a quarterly earnings conference call. Amid growing concerns about slowing growth, Amazon provided first-quarter revenue guidance of $121 billion to $126 billion, representing 4-8% growth year-over-year. The market consensus was $125.11 billion.
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