Big Tech Earnings Are Just Around the Corner

Next week, part of the Magnificent 7, namely Meta Platforms META, Google’s parent Alphabet GOOGGOOGL, Amazon.com Inc AMZN, and Microsoft Corporation MSFT will step into the earnings spotlight, showing the world the way another insight into where it’s headed with the development of generative AI.

Meta’s fourth quarter achievement showed the effectiveness of its strategy to enhance profits.

With its fourth quarter, Meta smashed estimates with an exceptional performance. Fourth quarter revenue surged 25% YoY to $40.1 billion, with is the most rapid growth that Meta recorded since mid-2021. Along with a cost-cutting initiative with which Meta lowered costs 8% on a YoY basis, its operating margin more than doubled as it reached 41%. This financial strength fueled the net income to more than triple to $14 billion or $5.33 per share. Meta also did a good job at taking care of its user base with 2.11 billion daily active users and 3.07 billion monthly active users, with the average revenue per user reaching $13.12. As for the guidance, Meta guided for 2024’s first quarter revenue to be in the range between $34.5 to $37 billion.

Alphabet’s fourth quarter results market quite a turnaround.

Google-parent reported its fourth quarter net income surged 52% YoY to $20.7 billion or $1.64 per share, with significant improvement in profitability as the operating margin expanded from 24% too 27%. The Google Cloud was a key growth driver, recording a YoY revenue rise of 26%, with the segment going from losses to becoming profitable with a positive operating income of $864 million amid a tough competitive landscape where it faces off Microsoft Azure and Amazon Web Services. 

But, what investors really want to hear this time is how is Google infusing AI into its offerings. During the last earning report. CEO Sundar Pichai focused on the enduring strength of Google Search and the growing power of the Cloud and YouTube, with both of these areas benefiting from AI development in the Gemini era.

Amazon crushed estimates with record holiday sales

With its fourth quarter results that had record Black Friday and Cyber Monday results, Amazon reported its net salesgrew 14% YoY to $170.0 billion, operating income rose to $13.2 billion, and net income swinged from 2022’s Q4 loss to an income of $10.6 billion.

As for 2023 as a whole, net sales expanded 12% and a net income of  $30.4 billion marked the return of profitability. As for first quarter estimates, Amazon guided for sales growth to continue in the range between 8 and 13%, with operating income exceeding prior year’s result. 

Along with the impact of automation efforts and expansion of drone delivery on efficiency and costs, investors will look at the company’s fastest-growing business segment AWS, along with advertising that should both benefit from AI advancements.

After a robust fiscal second quarter, Microsoft will show further how its AI advances are fueling innovation and boosting productivity. 

With its second quarter, Microsoft surpassed analyst estimates with both its top and bottom line. Microsoft posted revenue grew 18% to $62.02 billion with earnings per share amounting to $2.93. Operating income and net income both made a 33% jump. This robust performance was greatly owed to the success of the Intelligent Cloud business whose revenue surged 20% YoY, while Azure and related cloud services alone posted an impressive growth of 30%. As for the fiscal third quarter guidance, Microsoft forecasted revenue in the range between $60 billion and $61 billion. But, what will be under the spotlight is the way CEO Satya Nadella’s words are turning into action, as Nadella commented during the last earnings report that Microsoft went from talking to actually applying AI at a scale.

Besides showing their corporate financial health, these earnings reports will also provide valuable insights about the health of the tech industry as a whole, along with a glimpse of the direction in which the world is headed as the new AI era continues to unfold.

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