Big Tech, big expectations
Investors are keen to see what else Meta and Google have to offer as the tech giants seek to diversify beyond digital advertising.
Apple and Microsoft share two major similarities. The first is that they made their first billion in the computer industry. The second is that they made their first trillion in market value elsewhere. Magnificent second acts in phone making and cloud computing respectively made them the world’s first and second most valuable companies.
That is worth bearing in mind in a week where Alphabet and Meta took a beating on Wall Street despite reporting tremendous third-quarter profits. Both of these companies rely almost entirely on digital advertising for revenue and profit growth.
Alphabet was hit particularly hard. Earlier this year its Google Cloud division made its first profit, making punters giddy about Google eating into a lucrative market currently dominated by Microsoft and Amazon. But Google Cloud's quarterly revenue of USD8.41 billion fell USD200 million short of expectations. That caused a stock drop of over 10%, wiping USD150 billion — approximately the entire value of Disney — off the tech giant's market cap.
Google was hurt by comparisons to Microsoft, says Phillip Securities Research senior analyst Jonathan Woo. Revenue from the Azure cloud computing platform grew 29% year on year, Microsoft said in its earnings report, released the same day as Alphabet's.
