Earnings from Amazon, Microsoft, Meta, Alphabet, Intel, and others signal boom times are over, as inflation, lower demand, and interest rates weigh on results
Meghan Bobrowsky / Wall Street Journal :
Context & Ripple Effects
The group had appeared broadly resilient in 2018 earnings coverage of Apple, Amazon, Google, Facebook and Microsoft, but a July advertising-led selloff had already put Meta and Alphabet under pressure. The current results extend that weakness from ad markets to a wider set of large technology businesses.
The subsequent coverage shows the response taking shape: Alphabet, Amazon, Meta and peers began championing austerity in early 2023, while later earnings offered signs of improvement but still lagged in sales growth.
First-order effects
- Amazon, Microsoft, Meta, Alphabet and Intel face earnings pressure as inflation, softer demand and higher interest rates weigh on their results.
- Meta and Alphabet enter the period with added scrutiny of advertising demand after the earlier Snap-driven advertising warning rattled both companies' shares.
Second-order effects
- The broad-based slowdown gives Alphabet, Amazon, Meta and other tech firms a direct incentive to prioritize the cost discipline highlighted in the following year's coverage.
- A rebound in reported earnings does not by itself restore the prior growth profile, since the later coverage still identified slower sales growth at Meta, Amazon, Google and Intel.
Third-order effects
- If the shift to austerity persists, the largest platforms' operating playbooks move away from the expansion posture reflected in the 2018 coverage and toward tighter alignment between spending and demand.
- The shared exposure across advertising, commerce, software and chips suggests macro conditions can synchronize performance pressure across otherwise distinct Big Tech business models.
The trend: Big Tech is moving from a period of broadly resilient growth toward operating discipline as demand and financing conditions become more restrictive.