These aren’t the tech earnings you were hoping for

What do the most recent slate of Big Tech earnings reports and the 2022-23 Toronto Raptors have in common? 

They’re both very underwhelming. 

Driving the news: The triple A of Big Tech—Apple, Amazon, and Alphabet—all dropped earnings reports for the final quarter of 2022, each with its own specific points of concern

  • Apple reported its first year-over-year decline in quarterly revenues since 2019, hit by a combo of weakening consumer demands and a holiday season where China’s Covid lockdowns hampered production in factories making iPhones.  
  • Amazon may have beat analysts’ expectations, but its report raised some red flags. Online sales fell by 2% as consumer spending dipped, while its usually reliable cloud computing arm saw growth slow as clients reined in costs.
  • Alphabet saw ad revenue drop for just the second time since going public in 2004 as companies continue to reel back marketing budgets in an uncertain economy. YouTube also recorded a second straight quarter of declining revenue. 

Why it matters: After Meta’s surprisingly strong earnings report earlier this week, the struggles of these tech giants show that the industry is still navigating a rough patch and will need to make adjustments to thrive in our brave new post-zero-interest-rate world. 

  • “Big Tech has been spending money like ’80s rock stars for the last four to five years,” one analyst told Financial Times, “It feels like there’s adults in the room now.”

Zoom out: On its earnings call, Meta heralded 2023 as the “Year of Efficiency”, and its share price soared. Expect the rest of the tech world to try to emulate that success going forward, even if it means layoffs, hiring freezes, and cost-cutting.