The stock market in the United States ended the previous week with a wave of optimism. The reason, four tech giants reported results for the Q2 2020 that exceeded most analysts’ expectations. Amazon, Facebook, Alphabet, and Apple reported a significant increase in its stock value. This reaffirms the notion that tech giants are currently Wall Street’s backbone.
Amazon and Apple reported the largest growth with 65% and 31% so far in 2020, respectively. Amazon sales skyrocketed, sending the operating income to almost twice the previously reported value. For its part, Apple saw its shares climbed over the $400 threshold. Collectively, the four tech giants experienced a combined market value growth of over $200 billion.
Amazon, the e-Commerce Giant
With millions of people at home during the H1 2020, online sales soared on a global scale. Amazon, the largest online retailer on the planet, experienced unprecedented sales growth during this period. The result was earnings per share (EPS) of $10.30 for the Q2 2020. Analysts had predicted a maximum EPS of $1.46, thus the reported value far exceeded the expectation.
Likewise, analysts had predicted revenue of $81.56 billion for Q2. However, Amazon reported $88.91 billion on July 30, beating again the predictions. Compared to last year, grocery sales tripled during Q2.
Even though Amazon experienced some bottlenecks and shortages, the company successfully increased its grocery delivery capacity by over 160%. Jeff Bezos, Amazon CEO, took pride in this achievement and thanked all the company’s employees worldwide for their efforts.
For the Q3 Amazon is optimistic. The company expects net sales between $87 billion and $93 billion, which equate year-over-year growth ranging from 24% and 33%.
Facebook, the Social Media Giant
The popular social network reported revenues of $18.69 billion for Q2. This 11% revenue growth was Facebook’s slowest one since its 2012 IPO. However, the EPS of $1.80 beat analysts’ predictions too. Predicted EPS were $1.39 on revenues of $17.40 billion.
The company said these positive numbers were the result of more active engagement from consumers that are spending more time at home. However, this trend will likely revert as economies start opening up. Besides advertisements across its family of apps, Facebook reported revenue of $366 million from sales of its hi-tech virtual reality devices. This was an increase of 40% compared with Q2 2019.
For the Q3, Facebook is also optimistic and expects revenue growth of 10%.
Alphabet, Google’s Parent Giant
Alphabet reported revenues of $38.30 billion. This translated into EPS of $10.13, contrasting the analysts’ prediction of just $8.21. Likewise, the analysts’ had predicted revenues of $37.37 billion. Most of the company’s revenue comes from advertisements.
However, despite these results that beat analysts’ predictions, Alphabet experienced a decline in its revenue. This is the first time that the company has experienced such a phenomenon in its entire history. From the same period in 2019, the company’s revenue dropped 2% in the Q2 2020.
Nevertheless, the company remains optimistic and foresees long term growth in other domains besides advertisement. YouTube, cloud computing, and artificial intelligence are expected to bring in more revenue in the future.
Apple, the Computer Giant
Apple reported EPS of $2.58 for its fiscal third quarter, which surpassed analysts’ expectations of $2.04. Likewise, this tech giant’s reported revenue was $59.69 billion, exceeding analysts’ prediction of $52.25 billion. This was an 11% climb compared with the previous year.
With a market value of $1.84 trillion, Apple became the most valuable publicly traded company in the world. It displaced Saudi Aramco from the first place, which has a current market value of $1.76 trillion.
Apple’s stock has been appreciating since late March, and shares have a current value of $425.04 at the time of writing. Hence, the company’s Board of Directors has approved a four-for-one stock split, which will make shares more accessible to investors.