Both Amazon and Apple beat market expectations in their quarterly data, but only one remained as the undisputed winner.
As the week comes to an end, so does "earnings season" with Amazon and Apple being the last two major companies to release their quarterly data. Their earnings were anxiously awaited as both companies needed to prove their position in a shifting Big Tech market.
In the end, both Amazon and Apple passed the earning test, beating Wall Street estimates and surprising market analysts.
Apple’s revenues came in at $81,80 billion, comfortably ahead of the $81,55 billion forecast. Revenues per share for the last quarter were $1,26 instead of the predicted $1,20.
Though iPhone shares were worse than expected, overall profits increased thanks to Apple’s intelligent strategy of linking non-iPhone wearables to the rest of the ecosystem. Apple’s ecosystem and the devices around it remain the most sought-after on the market.
Furthermore, Apple is expanding its activities in the Indian market, one of the world’s biggest and least explored. Bob O’Donnell, chief analyst at Constellation Research, said that Apple has "almost no install base in India, it’s extraordinarily small. So, the great thing is, it’s almost nothing but upside for them there."
Falling iPhone sales for the third quarter in a row, however, didn’t go unnoticed by the markets. The Apple stock has been plummeting since earnings were released, dropping -4,25% since yesterday.
Amazon’s payout
The undisputed winner of this earnings season is Amazon. Its brutal "firing squad" finally paid off (for those who remained). The 27,000 employers laid off since last year have contributed to the better-than-expected revenues for this quarter.
Amazon’s net sales amounted to $134,38 billion, far more than the $131,63 billion estimated. Diluted earnings per share came in at $0,65, almost doubling the $0,35 forecast.
The most welcomed surprise was a 12% annual increase in Amazon Web Services revenues. AWS is Amazon’s only profitable service, amounting to almost 40% of revenues.
AWS faces increased competition from AI-powered Microsoft Azure, whose revenues increased by 26% this quarter, and Google Cloud, which started becoming profitable last quarter. Positive AWS growth points to Amazon’s retained position in the cloud market.
Senior managing director at Evercore Mark Mahaney said: "AWS is moving past the optimization cycle and customers start to shift towards new workload deployments."
Moreover, these earnings were released on Prime Day, which has reportedly been the most profitable day in Amazon’s history. According to the company, consumers spent $2,5 billion on this Prime Day alone.
Markets have rewarded Amazon with a +9,89% stock increase on Friday. The e-commerce company jumps ahead as the absolute winner of the "earnings race".
