1 billion dollars in profit per week, for that you have to go to big tech

1 billion dollars in profit per week, for that you have to go to big tech
1 billion dollars in profit per week, for that you have to go to big tech

While many companies are suffering from the difficult economic climate, trade wars and rising costs, the large American big tech companies are completely escaping the malaise. The stricter governments, such as the European Union, which wants to curb the monopolistic aspects of their business model, do not seem to bother them either. What’s more: companies’ profits rose sharply again last quarter, according to the figures published last week.

Meta, for example, the parent company of Facebook, WhatsApp and Instagram, seemed to be in decline. Facebook is losing young people to Tiktok and Meta also received a lot of criticism for its flawed privacy policy. Investors accuse CEO Mark Zuckerberg of pouring billions of dollars into the virtual metaverse, while it is not clear whether it will ever catch on. Yet Meta saw its profit triple in the past quarter compared to the same quarter the year before. Net profit of 14 billion dollars was achieved, which is no less than 1 billion dollars per week. The profit increase is primarily due to turnover, which rose by 25 percent. The company managed to convince advertisers to advertise more on its channels. Fast-growing Chinese retailers in particular, such as Temu and Shein, spent enormous amounts of money on campaigns on Facebook and Instagram. Chinese advertisers accounted for 10 percent of revenue, according to chief financial officer Susan Li.

First dividend

The company also cut costs significantly. The workforce shrank by 22 percent last year, to 67,000 people. According to Zuckerberg, artificial intelligence makes it possible to do the same thing with fewer people. The CEO also indicated that AI should help the company to grow further, without hiring many additional staff. The excellent figures also allow Meta to pay a dividend for the first time, albeit a meager $0.50 per share of $394. Tech companies usually wait a long time before paying out dividends, because it is more interesting for them to reinvest profits in growth, rather than paying them out to shareholders. Meta does that now, because it has too much cash and no longer needs that money to grow. The company will also buy back an additional $50 billion of its own shares.

Still keep an eye on the little ones

Amazon has remained somewhat under the radar in recent months, but presented excellent quarterly figures. CEO Andy Jassy, ​​Jeff Bezos’s successor, pays more attention to the little things and combined tight cost control with revenue growth. Cloud services in particular – Amazon, together with Microsoft, is the largest provider of cloud services – performed excellently. Total turnover increased by 14 percent to 170 billion, leading to a tripling of operating profit. As a result, net profit rose from $0.3 billion to $10 billion.

Earlier this week, Microsoft also presented excellent figures. This once again showed that it is the most valuable company in the world. Microsoft is the second company, after Apple, to break the $3 trillion market value barrier. Apple, like Meta and Amazon, released quarterly figures on Thursday evening. The figures were slightly better than expected. The Cupertino company saw sales increase again for the first time since autumn 2022, albeit by a modest 2 percent to $ 119.6 billion. It posted a 13 percent higher net profit of $34 billion. That equates to $500 million in profit per day. Sales of the iPhone in particular were better than expected. Yet Apple had to admit that sales in China had fallen by 13 percent. The Chinese government has an active policy to ban iPhones from government employees and services. Yet CEO Tim Cook qualified the decline. “If you don’t count the exchange rate effects, the decline is about 5 percent. The dollar has become more expensive against the Chinese renminbi in recent months. Four of the six most popular smartphones in China are from Apple,” he told business channel CNBC.

Tesla is the loser

The omnipotence of the so-called “Magnificent 7”, the seven most important American technology companies, therefore only appears to be growing. Investors also responded enthusiastically to the strong results. On Thursday evening, Meta’s stock price rose by 14 percent. Criticism of the dominant position of big tech will undoubtedly increase due to the enormous profit growth.

Yet there is also a big loser in that group of seven: Tesla. Since the beginning of this year, the electric car manufacturer has fallen by 26 percent. Tesla’s growth in the coming years will be disappointing, the company admitted. CEO Elon Musk is making frantic efforts to emphasize that Tesla is also an AI and robot company, but that cannot prevent the share from falling. Some are already suggesting that Tesla should be removed from the club of 7 and should best be replaced by Netflix, which proved last quarter that it has won the streaming war against Disney+ and others with flying colors.

The article is in Dutch

Tags: billion dollars profit week big tech


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