It’s income season.It’s during that quarter that we judge how well public tech companies are living up to their lofty expectations. So far this week, we’ve heard from Microsoft and Alphabet (Google) and Meta (Facebook), among other names.
While results from companies like Roku and Spotify contain interesting information about specific segments of the consumer tech market and the health of advertising demand, the breadth of Big Tech’s reach means their results add color to our current understanding of technology. and business world.
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What did the majors show us this week? The most important trend we gathered from three of America’s Big Five (we’ll hear from Amazon later today and Apple next week) is a very moderate growth trajectory.
Investors were thrilled, if not delighted, by these results. Both Alphabet and Microsoft were up a few points each in early trading, and Meta was up 15% after pleasantly surprising investors who had expected it to post another quarter of flat earnings.
We’ve shed more ink than I care to remember covering investors’ new preference for more profitable growth than crazy, useless growth. Mostly, we’ve discussed that in reference to startups, but in the case of these giant tech companies, things get a little messy. That said, cutting costs and investing in growth are clearly efforts that will please investors.
3%, 3%, 7%
Given how often we hear about startups carrying growth prospects in the triple digits, it might be surprising to imagine that a market cap of nearly $4 trillion in three companies could be protected by single-digit revenue growth.
Alphabet’s 3 percent revenue growth was led by Google Cloud’s top line growing to $7.5 billion from $5.8 billion a year ago. Search grew by less than $1 billion to $40.4 billion, while Google Networks and YouTube’s ad revenue declined.