Amazon, Apple and Alphabet earnings disappoint but Nasdaq enters bull market

[MongiIG]

Tech earnings on Wednesday dented what was otherwise a party on Wall Street, with the S&P 500 and Nasdaq both going into bull market.

 Jeremy Naylor | Writer, London | Publication date: Friday 03 February 2023 

Apple, Amazon, and Alphabet injected a dose of realism about the headwinds, with Amazon forecasting that the current quarter could see flat operating income.

 

Tech stocks disappoint

Apple, Amazon and Alphabet dented what was otherwise a party on tech stocks on Wall Street late on Thursday.

Let's take a look at the earnings that we got from those big three tech companies. We begin first with Apple on its fiscal first quarter (Q1) earnings, posting numbers of $1.88 per share, a 10.9% drop compared to the same quarter last year. Analysts expected a $1.94. Revenues falling by 5.5%. In the detail iPhone and iMac revenue came in short of estimates, down 8.2% and 28.6% respectively. iPad revenue did rise 29%.

Chief executive Tim Cook said three factors impacted the results: a strong dollar, production issues in China affecting iPhones, and the overall macroeconomic environment.

Apple share price chart

Let's take a look at the share price chart. And I think I want to do a daily candle here to begin with. You can see quite clearly the really long legs of this candle here indicate that the market initially took it as a positive going past the 200-day moving average and then came the pullback.

But I think it's easier to see this if you look at it in 30-minute candles. We can quite clearly see the beginning of all-sessions trade and where we closed out down 3.48%.

Amazon share price chart

Amazon saw the same sort of thing. Shares were jittery in extended trade last night. The internet giant missed earnings estimates posting earnings per share (EPS) of $0.03 compared to $0.17 forecast. Revenue was better than expected at $149.2 billion.

Investors were taken aback by the group's guidance. Amazon said its operating profit could fall to zero in the current quarter, as savings from layoffs don't make up for the financial impact of consumers and cloud customers clamping down on spending. Amazon forecast it earned between nothing and $4 billion in operating income this quarter, compared with the $4.04 billion that analysts had been expecting from the company.

And Amazon believes sales growth in its long-lucrative cloud business will slow over the next few quarters as well. Let's take a look at the 30-minute chart for Amazon at the point at which it went into extended trade last night. Like Apple, it went up and then pulled back and we lost 5.07% in extended trade last night.

Alphabet share price chart

Meanwhile, Google owner Alphabet missed on both top and bottom lines for its fourth quarter (Q4) numbers. Google's parent company posted earnings of $1.05 a share on revenues of $76 billion. Analysts anticipated earnings per share of $1.18 on $76.5 billion in revenue.

Alphabet suffered from a pullback in advertising revenue. Advertisers have cut their budgets of rising inflation and interest rates, fueled by concerns over consumer spending. The company said it would take a charge of between $1.9 billion and $2.3 billion, mostly in the first quarter of 2023, related to the layoffs of 12,000 employees announced back in January.

And like all the big tech stocks last night, losing a lot of ground, initially rising all-sessions on the platform last night, and then came this pullback, ending down 4.9% at the end of extended trade.