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Some tech companies have found a novel strategy for success: selling stuff.
Driving the news: Tech companies have routinely beat earnings expectations this quarter, but it’s not just because of the AI boom — more traditional tech revenue drivers like selling ad space and consumer products are doing a pretty good job of bringing in cash.
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Snap shocked a lot of investors by posting a profit thanks to improvements it has made to its ad products over the last two years.
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Pinterest had its best quarter in more than three years as its shopping ads found a hold with brands. It’s also doing a decent job at bringing Gen Z users onto the app — the hard-to-impress cohort now makes up 40% of Pinterest’s user base.
- Logitech had its first quarterly sales increase after more than two years of failing to keep up with a pandemic boom. It plans to keep growth going by selling more of its computer parts and accessories to the education and health sectors.
Why it matters: AI and chips aren’t the only way to make money in tech. Shakiness in the ad market and demand for consumer electronics like computers seems to have levelled off, at least for now, and companies that had patience are seeing their investments pay off.
Yes, but: Not everyone is rosy on the outlook going forward. Samsung’s profit outside of its booming chip business was relatively flat, and signalled that demand for mobile devices and TVs might have to go through an unsteady period before growing further.
What’s next: On the product front, the big test is still to come, with the likes of HP, Lenovo, Dell, and Sony reporting earnings in the coming weeks. But there are some positive signs — Acer, which reports revenue monthly, either achieved or neared double-digit growth for each of the first three months this year.