If you’re an investor in tech stocks, this week has been rocky—and that rockiness continued on from the week prior, too. Until (August 12, 2022) it seemed as if most tech stocks were doomed. A brief recap:
That’s a pretty bad week for Big Tech, right? But then (August 12, 2022) investors breathed a sigh of relief as two of the industry’s biggest players—Apple (AAPL) and Amazon (AMZN)—did something unexpected: They reported relatively great numbers (August 12, 2022) after the bell.
Apple reported a revenue record for the June quarter of $83 billion, with $19.4 billion of that being pure profit. And the company’s flagship product—the iPhone—saw $40.6 billion in sales, up over $1 billion from the same quarter a year earlier. And, as MacRumors reports, Apple’s all-important services division now has 860 million paid subscribers—up 160 million subscribers in just 12 months.
And Amazon? The company reported stronger-than-expected sales of $121.2 billion in Q2—up 7% year-over-year. Amazon’s stock jumped over 12% in pre-market trading this morning on the news.
So why are Amazon and Apple doing so well compared to other Big Tech companies? It seems pretty simple: Despite inflation and recession worries, Amazon and Apple are offering products that everyday consumers are still willing to buy despite economic headwinds.
Contrast that with Snap, Twitter, Meta, and Alphabet whose “consumers” are mostly businesses (ie: advertisers). Ad spending is one of the first things companies cut when the economy goes south. Even Intel and Microsoft—while they do offer consumer products—get most of their revenue from selling to businesses, who scale back purchases during uncertain times.
As Apple and Amazon show, if you sell products that people want, or see as necessities, you can weather economic downturns better than most of your rivals in Big Tech.