The big technology companies have managed to extend to 2021 the record profits they reaped during 2020, the worst year of the pandemic. They have done so thanks to changes in habits due to confinement and the rise of teleworking and services associated with the Internet. Amazon, Google, Apple and Microsoft have presented results with strong profits in recent days, which have further reinforced their stock market hegemony. Facebook, on the other hand, has been the most penalized on Wall Street due to the fear that, although last year it earned 43% more, its business as a social network has peaked and its great bet for the future, virtual reality, is too late. to arrive. Despite some concerns and weaknesses, the big technology companies continue to consolidate their supremacy, compared to other economic sectors, both in profitability and in business volume.
Amazon’s progress is one of the most striking. Problems in supply chains and labor shortages in the United States did not prevent the e-commerce giant from doubling its profits in the fourth quarter and increasing them by 56% for the year as a whole, to 33,364 million dollars (29,127 million of euros). It already has a bill of 469,822 million dollars (a third of Spanish GDP), 21.7% more than in 2020. And it has announced a 17% increase in the fee paid by its clients for its services principal because of the rise in “wages and transportation costs”. The global problems in the supply chains had marked the skepticism of Amazon investors in recent months, but this has not been the case: the stock registered an increase of close to 13% this Friday.
Facebook (renamed Meta in October after the scandal unleashed by the leak of internal documents that brought questionable practices to light) has broken a record this week on the Stock Exchange, but in negative. The company founded by Mark Zuckerberg saw its value shrink by $250 billion on Thursday, the biggest drop in absolute terms on record to date, despite net profit in 2021 growing 43%. The fact that most worries investors is that, for the first time in 18 years, the number of active users of their social networks has fallen. A disturbing trend for a company so dependent on ad revenue (98% of it), that it has done little to diversify into other activities such as the cloud. Or you have tried without success, such as your project to develop a cryptocurrency. In addition, the changes introduced in 2021 by Apple, which asks mobile users if they want the application they are going to download to follow their movements for advertising purposes, has significantly harmed Facebook (it meant 10,000 million dollars less in its income on last year).
The fact that the great bet for the future of Meta, the metaverse or virtual reality universes, will take ten years to build, as the company has recognized, does not calm analysts. They do not hide their concern about the possibility that Facebook has peaked and its users continue to go to the competition (TikTok and Snapchat).
“They have made a classic mistake by changing the name of the company to give relevance to another business that does not yet exist,” Ritholtz Wealth, CEO of investment firm Josh Brown, told US media on Thursday. Other market observers, such as technology journalist Alex Kantrowitz, believe that Facebook has no choice but to bet on the metaverse, because the alternative may be worse. Jared Weisfeld, from the firm Jefferies, agrees: “Mark Zuckerberg is committed to the metaverse and that is the future of the company.”
He knows in depth all the sides of the coin.
It is also highly dependent on advertising Alphabet, Google’s parent company, which had a net profit of 76,033 million dollars (67,141 million euros) last year, almost double the 40,269 million profit obtained a year earlier. The search company online most used in the world invoiced 257,637 million last year, the vast majority from advertising, well above the 182,312 entered between January and December 2020. Google has also announced a pull apart of its shares (it will divide each of them into 20 titles), which will make it more accessible to invest in them (now one is trading at about 2,830 dollars and they will go to 140 each).
The technology giant Microsoft posted a net profit of 18,765 million dollars in its second fiscal quarter, ending in December, 21% more than in the same period of the previous year. Analysts value that the company has been able to diversify its business towards cloud services, and is also seeking to gain a foothold in the succulent video game market, as shown by the recent purchase of Activision Blizzard, a company responsible for successes such as Obligations.
Meanwhile, Apple closed the fourth quarter of 2021 on a good note. Despite the chip shortage problems that concern the company, the iPhone maker achieved net profits of 34.63 billion dollars, a figure 20% higher than what it achieved in the same period of the previous year. This is a better result than expected by analysts and this despite the supply difficulties it is experiencing. “We had limitations in many of our products,” recently admitted CEO Tom Cook, who expects the situation to improve during the current quarter. Apple’s fiscal year ends in October.
Despite the fact that the accounts of the majors in the sector remain mostly solid, technology stocks are heavily affected by the volatility in the markets, due to fears that a future rate hike could hurt companies. The publication of the results of the last quarter has shown that some companies are performing worse than expected, such as Netflix, which is having more and more problems getting more subscribers, or Pay Pal. However, in a note to clients, Mark Haefele, head of investment at UBS Global Wealth Management, this week drew an optimistic picture: “Overall, the outlook remains strong, with earnings rising in aggregate for the coming months. close to 15%”. Tech’s record profit run doesn’t seem exhausted. for now
Exclusive content for subscribers
read without limits