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The three companies all posted strong results in the latest quarter, even as the global chip shortage continues to bite.
Big Tech was one of the big winners of the pandemic, with many companies reporting record sales and profits last year. But that surge is showing no signs of slowing down.
Tech titans Alphabet, Microsoft and Apple all performed strongly in the latest quarter, easily surpassing Wall Street expectations.
Alphabet
Alphabet, Google’s parent company, posted Q2 revenues of $61.88bn, a 62pc year-on-year increase and far above analyst predictions of $56.03bn. Its earnings per share (EPS) stood at $27.26, easily beating out an expected $19.14.
Google advertising revenue, the company’s mainstay, was up 69pc to $50.44bn, while cloud computing revenue grew by 53pc to $4.63bn. In the process, Google Cloud slashed its operating loss from $1.4bn in Q2 2020 to $591m this quarter. Of advertising revenue, both Search and YouTube revenues showed strong growth at 68pc and 84pc respectively.
Alphabet noted that its TikTok competitor YouTube Shorts, which was recently launched in Ireland, now has 15bn daily global views, up from just 6.5bn in March. Notably though, the company’s traffic acquisition costs rose sharply, as it increasingly relies on partner sites and paying competitors like Apple to be their default search engines.
Sundar Pichai, Alphabet’s CEO, commented: “In Q2, there was a rising tide of online activity in many parts of the world, and we’re proud that our services helped so many consumers and businesses. Our long-term investments in AI and Google Cloud are helping us drive significant improvements in everyone’s digital experience.”
Apple
Apple’s revenue in the latest quarter was $81.4bn, up 36pc year-on-year. It set a new company record for this quarter of the year and soared past Wall Street expectations of $72.93bn. Its EPS stood at $1.3, having doubled from last year and beating predictions of $1.
The services portion of Apple’s business, which includes Apple Music and Apple TV+, reached new heights. This division posted a record $17.4bn in revenue, an increase of 32pc. Subscribers to its services hit 700m, up 150m from the previous year.
In terms of product sales, every category grew, with net iPhone sales jumping by just under 50pc to $39.57bn. Mac and iPad net sales set quarterly records, with Mac up 16pc to $8.2bn and iPad up 12pc to $7.4bn. The company noted, however, that it is feeling pressure from the worldwide chip shortage and this could negatively affect product sales in the next quarter.
Tim Cook, the company’s CEO, said: “This quarter, our teams built on a period of unmatched innovation by sharing powerful new products with our users, at a time when using technology to connect people everywhere has never been more important.
“We’re continuing to press forward in our work to infuse everything we make with the values that define us.”
Microsoft
Microsoft, meanwhile, posted $46.2bn in revenue in the latest quarter, up 21pc from last year and just beating predictions of $44.1bn. Its EPS reached $2.17, a 49pc increase and also just above analysts’ expected $1.90.
The company’s cloud business fuelled much of this growth, with commercial cloud services revenue up 36pc year on year to $19.5bn. But many of its other lines of business were hit hard by the semiconductor shortage.
Sales of its Surface devices were down by 20pc while Windows OEM revenues declined by 3pc, which the company attributed to “supply chain constraints”. Cloud services and Microsoft Office subscriptions made up the shortfall.
Azure, Microsoft’s competitor to Amazon Web Services, saw a huge 51pc growth during the quarter. Gaming revenue hit $3.7bn, a 11pc increase, but Xbox content and services revenue was down by 4pc. A whopping 172pc increase in gaming hardware revenue saved the day, driven by the launch of the Xbox Series X and Series S at the end of last year.
Revenue from LinkedIn showed growth of 46pc, with annual revenue surpassing the $10bn mark for the first time in its history.
Microsoft CEO Satya Nadella, who is now also the company’s chair, commented: “We are innovating across the technology stack to help organisations drive new levels of tech intensity across their business.
“Our results show that when we execute well and meet customers’ needs in differentiated ways in large and growing markets, we generate growth, as we’ve seen in our commercial cloud – and in new franchises we’ve built, including gaming, security and LinkedIn.”
