Opinion: The FAANMGs have been reduced to the Fantastic Four

The anticipation of Big Tech’s second quarter earnings was palpable.

With a broad array of indicators pointing to a slowdown in the global economy, the highest inflation of the past four decades, and a big jump in interest rates, there were plenty of reasons to expect tech earnings could be another. given our fragile economic state: dare I say recession?

For some tech companies, it was a tough quarter. Snap SNAP social media company,
and Meta META,
+ 0.52%
comes to mind. Intel INTC chipmaker,
+ 1.79%
it may be at its lowest point.

Others performed much better. IBM IBM,
+ 0.96%
kicked things off with relative strength. Microsoft MSFT,
and GOOG alphabet,
it narrowly missed out on the estimates, but largely left investors reassured about their results. Amazon significantly beat revenue numbers and Apple AAPL,
numbers in the lead across the board.

It was a mixed bag of results that perhaps left as many questions as they answered. But in short, this quarter’s big wave of tech gains made that clear. Relying on a combination of the right products, the right markets and unlimited demand that far outweighs any global economic crisis, some companies are too important to be held back by the slowdown.

The following four companies have the ingredients that will make them too important to fail and, therefore, are expected to remain outperforming in the long run, even when the tech sector is unpopular.


After the big downside surprise in the first quarter, Amazon showed discipline and strength. The company is just the right size for a post-pandemic cycle, but it has seen an increase in revenue and the indications looked even better, especially after seeing the strength of the July Prime Day event. Profits are still hampered by Rivian’s RIVN,
+ 1.49%
investment. But the markets have looked further and the company even launched part of its Rivian fleet last month, promoting sustainable ambitions, which continue to amaze. The company also alleviated any “cloud growth problems” that may have existed, as its Amazon Web Services business grew 33% and reached nearly $ 20 billion clips per quarter. Amazon has also been buoyed by strong growth in its advertising business, growing at double digits low, but showing further signs of Amazon, along with Alphabet finding preference on Meta as advertisers retire, but not from their major platforms.


A mistake is a mistake, but Microsoft’s six-cent-per-share mistake was precisely a combination of foreign currency, China-related closures, and the continuing impact of Russia / Ukraine. Still creating $ 2.23 per share in EPS and growing in double digits from last year’s record results, Microsoft is exposed to both businesses and consumers, and its results indicate that the company is more than confident to weather any storm. economic imminent. The 40% growth in Azure kept Microsoft as the fastest growing public cloud company and, similar to AWS, was just a pinch below its last few quarters. The company has also seen solid growth in the cloud ERP business, research and advertising, and even the Surface business, which has not been hurt by the rapidly deteriorating demand in the PC space.


After Snap faltered, the market was ready to throw the baby out with the bathwater. Although Alphabet, like Microsoft, also missed the estimates, it was a near miss that didn’t bother investors as the stock saw a rebound after results crossed the line, largely because the advertising activity had bread and butter. Alphabet butter showed strength. The softening of ad spend seemed to fall short of Google Advertising as business grew double-digit year over year and showed much greater resilience than its counterparts, most notably Meta. What was immediately evident was that Google and YouTube advertising are fighting better against macro trends and competition than Tik Tok, which is proving to be formidable. Google’s Cloud business has also kept pace with AWS and Azure, growing over 30% and further demonstrating that the cloud as an operating model has favorable economic winds that will remain strong in turbulent markets.


A new iPhone is always a good thing for Apple. And TSM of Taiwan Seeds,
earnings comments should have been enough to indicate Apple would do well. Weaker iPad and Mac numbers align with a wider consumer and PC market retreat. However, even with the alarm bells raised by Apple due to continued closures in China, Apple once again delivered. With margins exceeding expectations and service revenues now reaching nearly $ 20 billion this quarter, Apple is also proving its strength isn’t just in its devices. The service portfolio, along with its growing content business, is working. And the guidance given by CEO Tim Cook was “pedal to metal” in so many words, which should have given investors something to smile before entering the next quarter.

Daniel Newman is the principal analyst of Futurum Research, which provides or has provided research, analysis, advice or advice to Nvidia, Intel, Qualcomm and dozens of other companies. Neither he nor his company holds equity positions in the companies mentioned. Follow him on Twitter@danielnewmanUV.


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