Apple, Amazon can’t escape slump
Shares fall as slowdown hits everything from electronics to e-commerce
Technology bellwethers Apple Inc., Amazon.com Inc. and Alphabet Inc. posted results this week that show an economic slowdown is throttling demand for everything from electronics and e-commerce to cloud computing and digital advertising.
Apple’s sales fell more than analysts predicted during the holiday quarter, slammed by slack purchases of iPhones and Macs. Amazon’s revenue was trimmed by soft consumer demand for products sold online and slowing growth in a once-booming business that provides remote computing power to companies.
Alphabet’s results missed estimates after customers curtailed orders for ads that appear alongside online search results.
“The war in Ukraine, inflationary pressures, economic uncertainty and macroeconomic headwinds kept the consumer sentiment weak in 2022 while smartphone users reduced the frequency of their purchases,” Harmeet Singh Walia, a senior analyst at Counterpoint Research, wrote in a report on Apple.
The tech industry is facing a harsh new reality after the flush years of the pandemic, during which electronics flew off the shelves and demand surged for more computing storage as people worked and went to school at home.
Now, with the U.S. Federal Reserve steadily raising interest rates to control inflation, combined with slowing economic growth, consumers and business are tapping the brakes.
Economic weakness also affected business demand for ads and cloud computing, said Mandeep Singh, technology lead at Bloomberg Intelligence.
The sluggish economy was most evident at Alphabet “as they called out advertisers pulling back, echoing what other ad vendors have said,” he said in an interview. “Cloud consumption is coming down, though growth rates are still higher there.”
As the U.S. markets opened Friday, Amazon shares fell 4.7 per cent and Alphabet lost 3.7 per cent. Apple was little changed.
That helped send the Nasdaq 100 lower, reversing the Thursday rally led by Meta Platforms Inc., whose results emphasized cost cuts and tens of billions of dollars in share buybacks.