Tech Giants’ Report Record Quarter

Three of the world’s largest companies -- Apple Inc., Microsoft Corp. and Alphabet Inc. -- reported about $57 billion in combined profit in a record-busting quarter, riding a resurgence in consumer and business spending.

Yet markets responded coolly. In part, investors were skeptical that these companies can continue to post double-digit growth for quarters to come, reports Bloomberg.

The world’s largest tech companies have gotten larger at a torrid rate. Their market valuations have skyrocketed this year as world economies rebounded from pandemic lows -- with both Apple and Microsoft topping $2 trillion in market value -- adding pressure to keep up the pace. Even though all the companies were bullish about their prospects, investor optimism was tempered by signs the momentum of the past year may be ebbing.

• Microsoft was first out the gate Tuesday, reporting sales that topped analyst expectations for the 10th straight quarter. Shares fell as much as 3.4% in extended trading, largely on concerns about growth in the cloud computing business, before Microsoft gave an optimistic forecast that calmed the market and the stock recovered.
• Apple reported revenue increased 36%, fueled by a 50% jump in sales of the iPhone, the company’s centerpiece product. But Apple’s hardware will be constrained by shortages of some chips and its lucrative services business is returning to a lower, more-typical growth rate, Chief Financial Officer Luca Maestri said on a conference call with analysts. “We expect very strong double-digit year-over-year revenue growth during the September quarter,” Maestri said, though “we expect revenue growth to be lower than our June quarter year-over-year growth.”
• Alphabet posted stellar numbers, too, mostly showing a rebound in Google’s main ads business, which grew 69% annually. That came after an anomaly of a second quarter in 2020, when the spread of the coronavirus shut down the economy and pounded ad budgets. This year, Google benefited from renewed surges in retail and travel spending, its executives said on a conference call. Still, Alphabet tempered optimism about the future after its tremendous quarter.