On Amazon, Apple, Google, Meta and Microsoft
Last week, several technology leaders shared views about business trends and the global economy during their quarterly investor earnings calls. The following are some of their comments.
Amazon CEO Andy Jassy: “There is obviously a lot happening in the macroeconomic environment … And we’ll balance our investments to be more streamlined without compromising our key long-term, strategic bets.”
Amazon CFO Brian Olsavsky: “[We] tightened our belt, including pausing hiring in certain businesses and winding down products and services where we believe our resources are better spent elsewhere.”
Apple CEO Tim Cook: “I want to acknowledge that we are still living through unprecedented times … From war in Eastern Europe to the persistence of COVID-19, from climate disasters around the world to an increasingly difficult economic environment, a lot of people in a lot of places are struggling. Through it all, we’ve aimed to help our customers navigate through the challenges while giving them the tools to drive progress for themselves and their communities. “
Google / Alphabet CEO Sundar Pichai: “We’re sharpening our focus on a clear set of product and business priorities … We are focused on both investing responsibly for the long term and being responsive to the economic environment … realigning resources to invest in our biggest growth opportunities … we have made several shifts away from lower priority efforts to fuel highest growth priorities.”
Meta/Facebook CEO Mark Zuckerberg: “While we face near-term challenges on revenue, the fundamentals are there for a return to stronger revenue growth …We’re approaching 2023 with a focus on prioritization and efficiency that will help us navigate the current environment and emerge an even stronger company.”
“Look I get that a lot of people might disagree with this [Metaverse] investment … but from what I can tell, I think this is going to be a very important thing and I think it would be a mistake for us to not focus on any of these areas, which I think are going to be fundamentally important to the future.”
Microsoft CEO Satya Nadella: “In a world facing increasing headwinds, digital technology is the ultimate tailwind … In this environment, we’re focused on helping our customers do more with less, while investing in secular growth areas and managing our cost structure in a disciplined way."
The following chart presents the 5-year stock performance for the companies mentioned above. For context, the S&P 500 is up 51% and the NASDAQ 100 is up 85% for the same period.
Apple is up 274%, Microsoft is up 181%, Google/Alphabet is up 89% and Amazon is up 86% - each outperforming the market indexes, while Meta/Facebook is underperforming, down 45%.
Chart 1: 5-Year Stock Performance (through Oct. 28, 2022)
Separately, the chart below presents year-to-date stock performance for these companies, with the S&P 500 down 18% and the NASDAQ 100 down 30% for the period.
Apple is down14% (outperforming the S&P 500), Microsoft is down 29% (in-line with the Nasdaq 100); while underperformers include Google/Alphabet (down 33%), Amazon (down 39%) and Meta/Facebook (down 71%).
Chart 2: Year-to-Date Stock Performance (through Oct. 28, 2022)
OUR TAKE
The comments from the CEOs cited above are generally consistent with the views of other business leaders: this is an uncertain time, reduce spending, improve operational efficiencies, and focus on long-term fundamental objectives.
Notably, Apple’s stock has performed the best, driven by solid execution and an increased focus on user privacy. Meta/Facebook performed the worst, impacted by changing social media dynamics and its significant investments in Metaverse and artificial intelligence technologies.
While some investors are focusing on “safe haven” opportunities during these uncertain times; the market pullback may provide good entry points to invest in innovative ideas with strong long-term growth prospects.