Big Tech Second Quarter Earnings: Microsoft and Apple Beat Estimates, Intel Hits Tech Stocks
Big tech companies reported their first half earnings, influencing stocks performance in Wall Street. l Credit: Chris Hondros/Getty Images
Key Takeaways
- Big tech corporates reported mixed earnings for the second quarter.
- Microsoft beat expectations, while Intel’s disappointing figures hit the broader tech sector.
- The market reacted heavily to the results, still waiting for Nvidia’s balance sheet.
The dust has settled on the second quarter earnings season, revealing a mixed bag for tech giants. While some companies like Microsoft and Apple soared above expectations, others fell short, leading to contrasting fortunes on Wall Street.
As the tech sector awaits Nvidia’s earnings report later this month, Intel’s disappointing results sent a negative signal to the entire industry, resulting in a significant decline in its share price.
Microsoft & Co. Top Expectations
Among the winners of this round of second-quarter earnings, Microsoft stands as one of the best performers. In the three months to June 30, the company behind Windows reported a net income increase of 9.8% to $22.04 billion, with diluted earnings per share rising to $2.95. Revenue grew by 15% to $64.73 billion.
The Intelligent Cloud business, including Azure and Windows servers, generated $28.52 billion in revenue, up 19%, slightly below the $28.68 billion consensus . Productivity and Business Processes revenue was $20.3 billion, up by 11%, with Office 365 Commercial revenue growth at 13% and LinkedIn revenue up by 10%. Personal Computing revenue reached $15.9 billion, with a 14% increase, and Windows revenue rose by 7%.
Amazon.com can also smile after it reported results that exceeded expectations , with net sales reaching $147.98 billion, a 10%. Online store sales rose by 5% to $55.39 billion and in-store sales increased 4% to $5.21 billion.
Net income doubled to $13.49 billion, with diluted earnings per share also doubling to $1.26. AWS sales grew 19% to $26.28 billion. Operating income surged 90% to $14.67 billion, surpassing the guidance range of $10.0 billion to $14.0 billion.
Free cash flow over the past 12 months soared to $53.0 billion from $7.9 billion. For the third quarter, Amazon expects net sales between $154.0 billion and $158.5 billion, an 8% to 11% increase from the previous year, and operating income between $11.5 billion and $15.0 billion.
Alphabet performed well , too. For the second quarter, it reported strong performance in its Search segment and momentum in Cloud, with both revenue and net income increasing.
Net income rose by 29% to $23.62 billion, while revenue increased 14% to $84.74 billion. Google Search & Other revenue grew to $48.51 billion, and YouTube ad revenue increased to $8.66 billion, although Google Network’s revenue dipped slightly to $7.44 billion.
Google Services total revenue reached $73.93 billion and Google Cloud revenue rose to $10.35 billion from $8.03 billion.
iPhone Sales Don’t Slow Apple Growth
Apple reported record June quarterly sales , surpassing estimates despite flat iPhone sales. For the three months ending June 29, sales rose 4.9% to $85.78 billion, exceeding the $84.53 billion expected by analysts.
Net income increased 7.9% to $21.45 billion, with basic earnings per share rising to $1.40 from $1.27. iPhone sales remained steady at $39.30 billion, while iPad sales grew 24% to $7.16 billion. Apple declared a dividend of $0.25 per share.
Among the Magnificent Seven, Facebook and Instagram’s owner Meta Platforms reported second-quarter revenue that surpassed expectations, along with an optimistic outlook for the year. For the three months ending June 30, revenue rose 22% to $39.07 billion from $31.99 billion a year earlier. Net income increased significantly to $13.47 billion, up from $7.79 billion, while diluted earnings per share climbed 73% to $5.16 from $2.98.
Meta reported an average of 3.27 billion family daily active users in June 2024, a 7% increase year-over-year. Ad impressions on its apps rose 10%, with the average ad price also increasing by 10%.
The company expects third-quarter revenue between $38.5 billion and $41 billion, compared to analyst expectations of $39.1 billion. This guidance factors in a 2% headwind from foreign currency exchange rates.
Meta’s full-year expenses are projected between $96 billion and $99 billion, unchanged from previous estimates. It also anticipates increased operating losses for Reality Labs due to ongoing development and investment efforts, with capital expenditures now expected to be between $37 billion and $40 billion, narrowed from the prior range of $35 billion to $40 billion.
Tesla And Intel Disappoint
While many of the Magnificent Seven reported earnings that topped analysts’ expectations, one company didn’t deliver as expected.
Tesla missed Wall Street profit estimates for the second quarter, reiterating that vehicle growth in 2024 would be “notably lower” than in 2023. For the three months ending June 30, net income nearly halved to $1.48 billion from $2.70 billion a year earlier, falling short of the consensus estimate of $1.90 billion.
Diluted GAAP earnings per share decreased to $0.42 from $0.78, while non-GAAP EPS of $0.52 fell below the LSEG consensus of $0.62. Revenue rose 2.3% to $25.50 billion, but GAAP gross margin dipped to 18.0% from 18.2%. Tesla noted that revenue was impacted by a $300 million negative foreign exchange effect and declining sales prices and deliveries.
In 2024, Tesla expects growth rates in energy storage deployments and revenue from its Energy Generation and Storage business to outpace its Automotive segment. The company also stated it has sufficient liquidity to support its product roadmap and long-term capacity expansion plans while maintaining a strong balance sheet during this “uncertain period.”
Intel reported total net revenue of $12.8 billion for the quarter, reflecting a 1% decline year-over-year. LSEG analyst estimates had anticipated revenue of $12.94 billion.
Adjusted earnings per share were just $0.02, falling short of the expected $0.10. Overall, the company experienced a net loss of $1.61 billion for the quarter, a significant shift from a net income of $1.48 billion during the same period last year.
Furthermore, on a more negative note, Intel also announced plans to axe 15% of its workforce and suspend its dividend after a disappointing second quarter.
Wall Street’s Reaction
After releasing their earnings, the stocks of several major companies showed varied performances. Microsoft shares fell 5.6% in after-hours trading to $399.20 in New York, following a 0.9% decline during regular trading.
In contrast, Amazon ‘s shares rose 4.9% to $175.00 after hours on Thursday, rebounding from a 1.5% drop earlier to close at $184.14. Apple shares increased 0.5% in after-hours trading to $219.50. Similarly, Meta saw a 3.4% rise in after-hours trading to $17.77, following a 2.5% gain during the day.
Tesla shares dipped 2.8% in after-hours trading, having closed down 2.0% at $246.38 on Tuesday. Alphabet ‘s Class A shares increased 1.0% to $183.60 after hours, while Class C shares rose 0.8% to $185.11.
In stark contrast, Intel ’s shares plunged by 32% to $20.74, negatively impacting other tech stocks like Nvidia – which is scheduled to release its Q2 results in late August – which lost 3.1% following Intel’s earnings report.
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