Editor’s Morning Note: Tech’s Big 5 had big second quarters. Yuge quarters, even.
After technology investment slowed in the second quarter, moderate amounts of pessimism felt warranted. After all, weren’t we seeing signs of a correction at last?
Well, perhaps not. Yesterday the rest of the tech’s Big 5 — Alphabet, Amazon, Apple, Facebook, and Microsoft — reported their second quarter financial performance. Each company beat expectations for the period. That’s impressive, and nearly counter-narrative.
How well did the big kids do? Let’s find out.
Calm down, Drake stans. Let’s peer at a collection of headlines from our two-and-a-half brace of earnings reports.
The theme of the above shouldn’t be too hard to grasp. That’s one ‘huge,’ two ‘beats,’ one ‘crushes’ and a single ‘shatters.’ Not a bad haul for three months.
Why are we spending a piece of our Friday together to look back at recent earnings reports? Because the above companies have the most cash and worth in all of tech. They can set the pace for M&A activity, and even change aggregate venture results through their private investment arms and activities.
A big deal from any of the five can change the value of other companies inside of tech, as we saw with Microsoft’s purchase of LinkedIn boosting Twitter’s value sharply. An outside example from yesterday, of course, is Oracle’s decision to buy NetSuite for $9.3 billion. Box shot higher.
Also, when the above companies do well, it can bode well for other sectors. Microsoft and Google do well selling into enterprise-level customers? That could indicate strong cloud adoption, despite lackluster macro growth. Facebook does well with its advertising business? That might mean that social ad spend is high, helping other companies; or, in that case, that Facebook is accumulating so much of the ad spend that it’s besting rivals by absorbing a larger cut of the available dollars. And so forth.
But, as we try to unspool what is going on with private companies, we can better track the weather if we look both big and small. And for now, the big kids are doing just fine.