Q2 Earnings for Apple and Amazon Increase

Image Source: Biz News

In order to reassure investors that the tech giants will be able to weather slowdowns in the global economy, Amazon and Apple reported better than anticipated earning.

The demand for Apple’s crucial iPhone remained robust, according to Apple, while Amazon predicted in a trading update that increasing fees for its Prime membership would increase its bottom line.

Both companies said that despite the sharp price increases, they were making progress in managing operating expenses. Shares shot up in response to the updates.

Indicators of how consumers are responding to the economy are heavily scrutinized in Apple and Amazon’s quarterly updates.

The US economy declined for the second consecutive quarter, according to official estimates released on Thursday. While this milestone would be regarded as an economic recession in many other nations, the US utilizes additional data to reach that determination.

Apple’s Chief Operating Officer, Luca Maestri, asserts that the company’s results for the June quarter show that, despite a difficult operating environment, it is still capable of managing its business successfully. The business anticipates that growth will resume in the upcoming months, he further noted. Sales growth has, however, slowed significantly from last year, and both businesses have seen profits decline.

In contrast to Amazon, which lost $2 billion due to changes in the value of its investment in electric vehicle manufacturer Rivian Automotive, Apple had a nearly 11% decline in profits to $19.4 billion (£15.9 billion) from a year ago. Apple was also dealing with COVID-19 lockdowns in China.

Tim Cook, CEO of Apple, stated that the company was observing a “mixed bag” of economic indicators, with the demand for iPhones remaining stable while other sectors, such as digital advertising, were deteriorating.

Total sales of Apple goods and services grew 2% compared to the same period last year, reaching $83 billion. Due to supply issues, sales of other items were slowed down, which continued to drive the company’s gains.

The company’s services division, which includes Apple Pay as well as its streaming music and video services, expanded by 12 percent.

Read Also: Apple is facing legal action in the US for antitrust breach

Even though its e-commerce sector has been struggling lately, Amazon said that its earnings were up 7% to $121.2 billion. For the second straight quarter, online sales dropped by 4%. But AWS, the corporation’s cloud computing branch, which saw earnings surge by 33%, continues to be a bulwark for the company.

Amazon alarmed investors in the spring when its online sales declined and the company cautioned that it had overspent on hiring staff and building new warehouses in an effort to capitalize on the enduring purchasing trends from the pandemic. This time, however, it gave a more upbeat assessment.

Andy Jassy, the CEO of Amazon, stated that despite ongoing pressures from inflation in the costs of fuel, energy, and transportation, the company is making progress with the more manageable costs we mentioned in the previous quarter, particularly by raising the productivity of its fulfillment network.

Because Prime Day, when sales usually produce a boom in purchasing, was delayed from June to July, Amazon predicted that its online sales would appear particularly weak.

Big Tech Companies’ Earnings Unaffected  

According to Laura Hoy, an equity analyst with Hargreaves Lansdown, the strong can endure even in the most challenging situations. “Big tech’s been a mixed bag this earnings season,” she added.

According to Scott Kessler, global sector lead at Third Bridge, Apple and Amazon are too large to be untouched by indications of a slowdown in the world economy.

However, they have a little bit of a special advantage due to their size when negotiating rates in particular.

“Apple’s done a good job of managing those prices—it doesn’t hurt that they’re often one of the major purchasers,” he added.

Christie Pitts, a general partner at startup fund Backstage Capital, meanwhile, told the BBC that Amazon had some pressure on its results, in part because of the impact of inflation, “since customers have less disposable money to spend on impulsive items.”

Opinions expressed by San Francisco Post contributors are their own.

Anthony Carter

I’m Anthony and I finished my degree graduate studies on Public Administration and I spend most of my free time in contributing written works about community development, public administration and lifestyle.

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