Eurozone Economy Grows Faster Than Expected, but So Does Inflation
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.
Collectively, it was a sign that tech may have already hit a bottom and is beginning to rebound, said Dave Harden, the chief investment officer at Summit Global, a firm near Salt Lake City with about $2 billion under investment that counts Apple among its holdings.
“These guys are still delivering,” Mr. Harden said. “They’re acting responsibly and navigating through a choppy period.”
The better-than-feared results lifted the companies’ share prices and provided a jolt to the stock market, 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.
Sundar Pichai, Alphabet’s chief executive, cast the slowing economy as an opportunity, saying the company would sharpen its focus and “be more disciplined as we go forward.” He added, “When you’re in growth mode, it’s tough to always take the time to do all the readjustments you need to do and moments like this give us a chance.”
In what many investors interpreted as a testament to the industry’s optimism, Microsoft said it expected double-digit revenue growth for the next year, and Amazon said it expected sales to increase at least 13 percent in the current quarter.
Satya Nadella, the chief executive officer at Microsoft, said the…
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