Most of the biggest tech names managed to regain some ground Friday, propelled by Apple’s comparatively healthy performance. But the general mood remained depressed.
Several hundred different data points are shared with the market. Combined, they tell a story of industries battered by a strengthening greenback, supply chain snarls in a third year, inflation that has yet to be controlled and economic growth figures that look increasingly grim. We distilled all of this into 10 charts – be sure to tell us what we missed.
The woes in the semiconductor industry can best be summed up by the disaster unfolding at Intel Corp., the largest U.S. it. Chipmaker. As a supplier of components for computers and servers, Intel has been hit hard by the slowdown and is desperately trying to adjust even as it pledges to catch up to rivals Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Corp. In time to help fourth quarter numbers.
A year ago, the world was short of chips and suppliers were rushing to buy equipment and crank production. In the past month, they have collectively slashed 2022 budgets by more than $16 billion and are preparing to reduce spending next year.
A recurring theme in earnings this season has been the impact of a rising U.S. economy. it. dollar against almost every opponent. Few companies are immune, with Amazon.com Inc. Among the hardest hit.
Apple Inc. Looks relatively strong compared to all the rest. His iPhone was quite good, although a touch below estimates and boosted by a few more days of availability. Services, the division that includes Apple Music and Apple + TV that is the company’s second-largest contributor to revenue, continued to post solid growth, albeit at a slower rate than previous quarters.
Meta Platforms Inc. is hit from all sides. The owner of Facebook, Instagram and WhatsApp has been heavily damaged by changes to Apple’s privacy rules, which makes it difficult to track users across apps and thus drives down advertising rates. The global downturn, including higher inflation, only adds to the woes. Although user numbers are slowly ticking up — it has 3.7 billion active monthly users across its family of apps — average revenue per person is sliding.
Meanwhile, the social media company is burning money on its Reality Labs division – founder Mark Zuckerberg’s venture into virtual reality and the Metaverse that inspired last year’s name change. The business has lost more than $20 billion to date, and Zuckerberg told investors to expect the shortfall to last for some time.
Alphabet Inc. Not doing so well, but at least it’s growing. A 6.1% increase in third-quarter revenue was the slowest since June 2020 after the Covid-19 pandemic hit. Its Google search-based advertising divisions are outpacing its network affiliate businesses and video service YouTube, while cloud services remain solid.
At Microsoft Corp., a decade-long transition away from client computing — where revenue is directly tied to sales of computer and server hardware — is helping it weather the storm better than most. Revenue for the September period climbed only 11%, the slowest in five years, but this is much better than most tech peers. Its cloud and productivity offerings are the main reasons for this relative strength. Customers – both consumer and corporate – are somewhat wedded to its suite of Office products, while those who have signed up for its Azure cloud services are not in a position to escape when times get tough.
Two recent charts show just how badly investors have reacted to all the news. The stock market downturn is a global, cross-industry phenomenon. Still, the technology sector fared much worse, with the Nasdaq 30% lower than a year ago.
The most affected are the companies with a great reliance on advertising or short-term consumer purchases. Money appears to be shifting to what could be seen as more defensive technology stocks, and Netflix Inc. Shines the brightest among them.
If there is any consolation, it is that investors no longer have to wonder about the assets of Twitter Inc. This is now Elon Musk’s problem.
More from other Bloomberg opinion writers:
• CHIPS Act will not work without every part of the chip: Thomas Black
• Money-losing Airbnb hosts have three options: Teresa Ghilarducci
• Tech investors overreact like they’re shouting into a cloud: Tim Culpan
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Tim Kulpan is a Bloomberg opinion columnist covering technology in Asia. Previously, he was a technology reporter for Bloomberg News.
More stories like this are available at bloomberg.com/opinion