No boom can last forever, even for the technology industry’s most affluent companies. Investors punished the biggest tech companies earlier this year, erasing $2 trillion in market value over fears the industry would falter in the face of rising inflation and a slowing economy.
But this week, as the United States reported that economic output fell for the second straight quarter, Microsoft, Alphabet, Amazon and Apple posted sales and profits that showed their businesses have the dominance and diversity to defy the economic woes hurting smaller companies.
Microsoft and Amazon proved that their lucrative cloud businesses were continuing to expand even as the economy cools. Alphabet’s subsidiary, Google, demonstrated that search advertisements remained in demand among travel companies and retailers. And Apple papered over a downturn in its device business by increasing its sales of apps and subscription services.
even as Alphabet and Microsoft fell short of Wall Street’s expectations.
The results made clear that the companies are not immune to problems such as supply-chain disruptions, rising costs and shifts in customer spending. But their giant businesses are not as vulnerable to the various challenges sweeping across the economy as smaller companies like Twitter and Snap, the owner of Snapchat.
During calls with analysts, the companies’ chief executives cautioned investors about the months ahead, using words like “challenges” and “uncertainty.” Concerns about the economy are leading some of them, including Alphabet, to slow the pace of hiring and take other precautions, but none have said they plan to begin making layoffs.
Meta, the company formerly known as Facebook, was an outlier among the biggest tech companies, reporting its first decline in quarterly revenue since going public a decade ago. Its woes were an outgrowth of rising competition from TikTok, which has sapped it of users and advertisers, and challenges from privacy changes on iPhones implemented by Apple.