After a particularly difficult year in the stock market last year, several international technology giants such as Apple, Microsoft, Amazon, and Meta (Facebook) have published their financial reports for the first quarter of 2023 in the past two weeks. Who disappointed investors, who surprised them positively, and how did the shares react? Ynet provides an overview of the best and worst-performing stocks.
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Alphabet
Alphabet, Google's parent company, released its financial reports on April 25 and presented better-than-expected results both in terms of profit and revenue.
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Google headquarters in California
(צילום: JUSTIN SULLIVAN / GETTY IMAGES NORTH AMERICA / AFP)
The reports showed especially good results in the search engine domain and in spite of the decline in revenues from YouTube. Additionally, the company's cloud services grew by 28%, managed to generate a small profit for the first time, and is expected to continue to benefit from rising demand among businesses.
Meanwhile, YouTube showed growth in its short video activity (Shorts) and stability in ad revenue. Cost-cutting measures, alongside convenient comparative figures, are expected to be support points and already contributed to a 1% improvement in operating profit margin. The stock did not move substantially after ht publication of the report but rose around 20% since the beginning of the year.
Microsoft
Microsoft, another veteran technology giant, released its financial reports on April 25 and also showed strong and better-than-expected results in terms of both profit and revenue.
Despite the decline in personal computing activity, the company was supported by the growth of Microsoft 365 ("Office"), the Azure cloud project - which, despite a slight decline, still showed a high growth rate of 27%, and the professional social network LinkedIn.
Another factor that supported the stock is the integration of artificial intelligence (including through investment in ChatGPT), which is expected to contribute to the growth of the number of users on the company's search engine, Bing.
The stock rose by about 10% in the two days following the release of the reports and completed a rise of about 30% since the beginning of the year.
Apple
Apple was one of the last technology giants to release its first-quarter financial reports last Friday. It also reported strong results that exceeded expectations in both profit and revenue, and in response, the stock jumped 4.7% and completed a rally of about 34% since the beginning of the year.
The company's strong results were supported by a significant increase in iPhone sales, thanks to market recovery in China and growth in emerging markets such as India. In addition, the company saw growth in its services division user base (975 million paying subscribers, following annual growth of 150 million), alongside weakness in its gaming and advertising divisions.
Overall, despite macroeconomic challenges, Apple presented strong reports with convenient comparative figures, positioning it for continued growth into the second half of the year.
Meta
Meta (formerly Facebook) led by Mark Zuckerberg, also published strong first-quarter reports on April 26 that exceeded expectations in both profit and revenue, supported by growth in daily average users and advertising activity. A 24% increase in Instagram usage also contributed to the company's results.
Furthermore, the ongoing scaling back of the workforce also sent positive signals to the stock market, as it suggests that Zuckerberg has now shifted the company’s focus from the Metaverse to efficiency, which supports the potential for continued improvement in profitability.
The stock initially reacted with a sharp rise of about 14% on the day of the report's release, but fell about 3% in the following week. The Meta stock has seen a significant jump of about 93% since the beginning of the year, although it is still about 40% lower than its peak in September 2021 after sharp declines in the previous year.
Amazon
Amazon, the online retail and technology giant founded by Jeff Bezos, the third richest person in the world, released its reports on April 27. The reports were strong and exceeded expectations both in terms of sales and profit, and forecasts for the second quarter of the year were also in line with expectations.
One weakness that was noted was the activity of the company's cloud division, AWS, which was relatively low in April compared to the first quarter and raised concerns about its future.
On the other hand, Amazon recorded a strong increase in its sales and advertising volume. In addition, the company took several steps to reduce costs in its operational activity, which could support profitability in the coming years.
Another important point to note is that the advertising activity showed a growth of 21%, mainly due to investment in artificial intelligence. The stock reacted with a rise of about 5% following the release of the reports, but then fell about 7% in the following two days. Since the beginning of the year, the stock has risen by approximately 26%.
AMD
AMD, the international chip giant, published its reports on May 2, which showed a decline in both profit (though it was still above expectations) and sales (according to expectations).
The company's forward-looking projections for the next quarter were also moderate, although some improvement is expected in the second half of the year.
According to the reports, the company experienced a decline in personal, mobile, and gaming computing activity. In addition, despite weakness in the data center business due to excess inventory among the company's cloud customers, it is expected that this business will see sales growth of over 50% in the second half of the year.
Another good marker for the company is that, according to unconfirmed reports, Microsoft is working with AMD to expand their collaboration in custom processors for artificial intelligence. According to the reports, Microsoft is providing financial support to AMD for the development of a customized processor (called Athena), which will enable Microsoft to meet the growing demand for AI-based services.
After the reports' release, the stock reacted with a decline of about 9%, while since the beginning of the year, the AMD stock has risen by approximately 38%, although it is still more than 40% below its peak in November 2021.
Intel
Leading chip company Intel released its reports on April 27. In contrast to its competitor AMD, Intel's reports were relatively good compared to expectations.
The company reported a loss, but it was lower than what analysts had predicted, and sales also declined, but again, by less than expected.
Looking ahead, Intel's sales forecast for the second quarter reflects the company's expectations for a recovery in the personal computer market (with estimates that the market will hit bottom during the upcoming quarter and then undergo a correction upwards).
Additionally, there is an expectation of achieving balance in customer inventory levels, which is expected to also contribute to demand. However, in the short term, macroeconomic data appears to pose a challenge for the company.
The stock reacted with a slight increase to the reports and has risen by about 17% since the beginning of the year.
Tesla
Tesla, the technology and electric vehicle giant owned by Elon Musk - the second richest man in the world, released its reports on April 19th, which featured mixed trends.
The company reported a 24% growth in sales, lower than expected, and a decline in profitability. However, the delivery report released at the beginning of April was slightly disappointing; Tesla reported record deliveries for the first quarter of 2023 (with an annual growth rate of 36% to 422,875 units), but the number was slightly lower than expected.
On the other hand, Tesla confirmed its vehicle delivery forecast and stated that it is expected to begin production of its Cybertruck later this year after several delays. The stock slid 10% in reaction to the report, although it bounced back over the past trading week. Since the beginning of the year, the stock has recorded a sharp increase of about 38%.
Note: Investing in the stock market can be risky and may lead to significant financial losses. This article should not be seen as a recommendation regarding any of the mentioned stocks. The data is accurate as of the end of the previous trading week and is subject to change. Banks and investment advisors have no personal interest in the matter, and the coverage is not a substitute for advice that takes into account the data and needs of each trader.
The article was written with the assistance of Yekira Shachar, Global Market Desk Manager at the research department of Bank Hapoalim.