Hello, tech editor Alexei Oreskovic here filling in for David today.
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It’s earnings season for tech companies, and if you’re feeling confused about the state of the industry, you can be forgiven. So far, the quarterly results posted by many of the biggest names in tech have been surprisingly…decent.
Google parent company Alphabet, Mark Zuckerberg’s Meta, and Microsoft all delivered revenue and profits in the first three months of the year that were better than analyst expectations.
But wait, isn’t the tech industry supposed to be in the dumps? Meta is laying off tens of thousands of workers. Ditto with Amazon, Alphabet, and so many others.
There’s no question that business has slowed down. Meta’s revenue increased a scant 3% year over year, a far cry from the 40%-plus rates it posted just a couple of years ago. But investors were expecting a revenue decline at Meta, which didn’t materialize.
One takeaway is that the advertising spending that many of the largest internet companies rely on, appears to be stronger than people thought. As one money manager told Bloomberg, the feared “earnings apocalypse” didn’t come to fruition.
The coming weeks will provide a broader reading of the tech market’s health with two key companies reporting: Apple and Nvidia, neither of which have ad-based revenue models.
The bar is low for Apple, which reports earnings on Thursday. Analysts expect that sales will come in 4.4% lower than the same time last year, with investors more focused on the company’s developer conference next month. That’s when the company is expected to unveil a new augmented reality headset, its first expansion in years into a new product category.
Nvidia, on the other hand, is at the center of the generative A.I. craze sweeping the tech industry. Its GPU chips are the vital engines that power some of the most mind-boggling A.I. feats, and demand for the chips is red hot (to wit, reports that Elon Musk recently purchased 10,000 GPU processors for an A.I. project, according to Business Insider).
Of course, Nvidia’s stock is trading at its 52-week high. Nvidia is carrying all the hopes and hype of A.I. on its back. So while the internet companies benefited by simply exceeding investors’ lackluster expectations, Nvidia may have to clear a much higher bar.
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Alexei Oreskovic
Data Sheet’s daily news section was written and curated by Andrea Guzman.
This story was originally featured on Fortune.com
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Source: https://finance.yahoo.com/news/feared-tech-earnings-apocalypse-hasn-174229022.html