Amazon share price jumped 13% during after hours after reporting better than expected results and a rosy guidance for 3Q.
Revenue was up 7%, largely helped by its cloud business (+33%) and ad revenue (+18%). The e-commerce sales actually went down by 4%.
The free cash flow, which is the key metric that Amazon focuses on, was worse. It was the third consecutive quarter that was negative. It was down by 293% compared to a year ago. Even operating cash flow was negative!
I am wondering why is this considered a good set of results.
Like other tech companies, Amazon has already laid off 99,000 employees or 7% of the workforce. They are still hiring mainly for cloud and ads, but less so in other areas.
Maybe it is the rosier guidance. Revenue was expected to grow between 13% and 17% in 3Q and that the operating income will be positive again, but still lower than last year’s.
Next let’s talk about Apple.
Revenue grew 2%, contributed by iPhone (+3%) and services (+12%). All other products (Mac, iPad, wearables) registered lower revenue.
Although a low single digit growth, it is forgivable in such times and Apple has experienced such growth rates in 2019. It is familiar territory.
Earnings was down 8% but gross margin expanded. Apple CEO Tim Cook said that inflation was present in logistics, wages and certain silicon components. The numbers showed inflation didn’t hit Apple that much.
Apple share price went up by 3% during after hours.
Comparatively, I see Apple’s results as the most resilient. Amazon isn’t that impressive but somehow the share price jumped up a lot more than the rest. Microsoft and Alphabet results were meh. Meta was worst, the only big tech with a revenue decline.
Market sentiment has improved tremendously in the past 2 days and I believe it is what pushed the share prices up for most of these big tech stocks.
If these sets of results were released when sentiments were bad, I believe the share prices would have gone down instead.
