Amazon's Growth Slows Despite Its Rich Valuation
Amazon anticipates fourth-quarter revenue to be between $140 billion and $148 billion, up 2% to 8% from the same period last year. Refinitiv reports that analysts were anticipating sales to total $155 billion.
- Although sales growth was back in the double digits in the third quarter with a 15% increase in revenue, Wall Street's expectations were not met
- Amazon has had a difficult year thus far, much like the rest of Big Tech, as it deals with macroeconomic challenges, skyrocketing inflation and rising interest rates
- These difficulties came at the same time as a downturn in Amazon's main retail business as customers started going back to physical stores to shop
Apple Is Steady
Apple services' segment saw growth slow down, which some analysts believe could have an impact on future iPhone sales. Sales of services, which include sales from the AppStore and Apple TV+, were $19.2 billion, an increase of around 5% from the previous year but less than the year-over-year gains in preceding quarters.
- According to Maestri, the slowdown in services was brought on by slowdowns in digital gaming and advertising as well as the effects of foreign exchange
- Investors are worried about slowdowns in Apple's services division because it is a crucial part of the company's business diversification as the iPhone gets older
- To offset this, Apple increased the cost of its Music and TV streaming services earlier this week, which might increase the company's services revenue for the current quarter
Big Tech's Boom Might Be Over
Big Tech has morphed into mature firms that are no longer going to dazzle Wall Street with explosive growth in their core operations, and none of them appear to have any brand-new, enormous opportunities on the horizon.
- For instance, Alphabet just reported revenue growth of 6%, which was the lowest quarterly increase in a decade
- As a result, with Big Tech today, you get exactly what you see. No one anticipates their sales to soar to new heights any longer, regardless of how great their new products might be
Of course, Big Tech will be at the center of many new changes going forward, but for now they are all concentrating on generating more sales and profits from their current operations. As such, Apple and Amazon are increasingly converting their digital properties into ad businesses. At Meta, there is an effort to replicate the success of TikTok while Alphabet tries to turn the focus on YouTube, a business which is already more than 20 years old.
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