Apple, Alphabet and Microsoft reaped almost $1bn a week in profits in latest quarterly announcements. At $56.8bn, the total was almost double the year before and 30 per cent more than investors had predicted.
The figures were “absolutely stunning”, said Jim Tierney, a portfolio manager at AllianceBernstein, adding that “digital advertising is just on fire”, as advertisers race to follow audiences who have turned to online services in huge numbers. “I think the takeaway is, all the digital habits that we picked up over the past 12 months, they’re going to stick with us when we come out of this,” Tierney added.
Microsoft CEO Satya Nadella said the stunning figures were not a one off. He said: “Five per cent of world GDP is tech spending, it’s projected to double — the doubling is going to happen at an accelerated rate.”
Do bumper profits mean tech have a too much power?
The latest earnings figures showed that “these companies have such significant power over so many aspects of our lives”, Samir Jain, director of policy at the US Center for Democracy and Technology. “Commerce, speech, entertainment, news, work — as we’ve become more dependent on technology as a result of the pandemic, it’s not surprising to see these companies doing well.”
Sales of Apple’s iPhones jumped 50 per cent, while Google’s advertising sales soared 69 per cent from a year earlier, when the pandemic resulted in the company’s first-ever revenue decline. Growth at Microsoft’s Azure cloud platform, its most important new business, re-accelerated to more than 50 per cent.
Even supply chain problems that have weighed on companies globally this year, particularly a shortage of semiconductors, failed to damp the tech companies’ ability to rake in revenues.
In total, the three tech companies generated $189.4bn in revenue during the latest quarter.
That was 39 per cent more than the same period the year before, and some $15bn more than Wall Street had been expecting.