Big Tech’s Q2 Earnings Reports, Ranked

Having testified before Congress on Wednesday, Big Tech was subject to the grilling of investors after releasing second-quarter figures on Thursday night

July is turning into a big month for antitrust regulators! Not only does Microsoft (NASDAQ: MSFT) have the European Commission breathing down its neck due to anti-competitive complaints from Slack (NYSE: WORK), but Capitol Hill also wants hours. 

After more than five hours of grilling on Wednesday night, the CEOs of Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL), Amazon (NASDAQ: AMZN), Apple (NASDAQ: AAPL), and Facebook (NASDAQ: FB) were set loose on the world once more. With that, the antitrust subcommittee capped a 13-month investigation of which we can expect to hear the results within the coming months. Personally, I can’t see much more than a fine and maybe some sanctions for Big Tech. 

More importantly right now to investors, all four of these companies and their collective $4 billion in market value reported Q2 earnings after the bell on Thursday; so how did they do?

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1. Amazon

It was a close call between Jeff Bezos’ e-commerce empire and Tim Cook’s Apple, but the sheer magnitude of Amazon’s earnings beat puts it in the number 1 spot here. We probably could’ve guessed that e-commerce was going to have a boom moment judging from rival Shopify’s (NYSE: SHOP) blowout earnings earlier this week, so naturally, Amazon would boom with it. 

To start, the company reported a record second-quarter profit of $5.2 billion, or $10.30 per share, almost doubling its performance from the same time last year. 

“This was another highly unusual quarter, and I couldn’t be more proud of and grateful to our employees around the globe,” Bezos said at Thursday’s call. “As expected, we spent over $4 billion on incremental COVID-19-related costs in the quarter to help keep employees safe and deliver products to customers in this time of high demand — purchasing personal protective equipment, increasing cleaning of our facilities, following new safety process paths, adding new backup family-care benefits, and paying a special thank-you bonus of over $500 million to front-line employees and delivery partners.”

With e-commerce up 47.8%, Amazon Web Services seeing revenue jump to $10.8 billion, and guidance for Q3 coming in at between $87 billion and $93 billion, it’s a good time to be an Amazon investor. 

2. Apple

Unlucky not to take top spot in our lucrative list, the iPhone maker proves that an apple a day does a whole lot better than just keeping the doctor away. Apple’s 11% revenue growth to $59.7 billion has seen its share price soar after hours, pointing towards an all-time high at market open. 

We saw earlier this week that iPhone sales had risen 225% in China on a quarterly basis, but the Cupertino-based tech giant also revealed that its services segment saw revenue increase to $13.16 billion, with wearables also jumping to $6.45 billion. Apple has fared well in 2020, with shares up 28% year-to-date versus the S&P 500’s (NYSEARCA: VOO) 0.3% decline. But Apple wasn’t done yet…

Not only was a congressional hearing and blowout earnings enough coverage for the week, but Apple also announced that its board had approved a 4-for-1 stock split, effective August 31. Apple investors can look forward to receiving 3 additional shares now for every 1 they own, and Apple’s stock price to drop to around $100 per share based on its current price. 

There was one mark on the occasion as Apple revealed that COVID-related delays mean that the company will likely have to push the unveiling of its new iPhone by several weeks. 

3. Facebook

How must Mark Zuckerberg have felt on Wednesday night? Sitting in front of Congress as they mistakenly called his business Twitter (NYSE: TWTR), berating Facebook for its copycat tactics and ‘suppression of free speech’ — before then contradicting itself moments later after unveiling the most popular posts on the site — and all the while, knowing his company had crushed it in Q2. It must have felt great…

The world’s largest social media network saw monthly active users (MAUs) jump to 2.7 billion in Q2 — that’s roughly 35% of the planet’s population — while ad boycotts didn’t stop its revenue soaring 11%, with net income coming in at $5.18 billion, or $1.80 a share. Otherwise, there wasn’t a whole lot to report from the social media giant, which also claimed that ad boycott spillover into Q3 was not having a huge impact on revenue. 

“We expect our full-quarter Q3 year-over-year ad revenue growth rate to be roughly similar to this July performance,” CFO David Wehner said, adding that the boycott was reflected in this trend, along with factors like economic insecurity. Facebook’s stock has risen a respectable 11.8% YTD, though not quite as much as fellow social media stock, Pinterest (NYSE: PINS), which is up 34% YTD. 

4. Alphabet

Any other day and Alphabet’s Q2 might have been considered pretty good, but its first-ever revenue decline as a public company marred the occasion somewhat. The Google-parent company did beat most expectations with the exception of its cloud division: 

EPS: $10.13 versus. $8.21 estimated.

Revenue: $38.30 billion versus $37.37 billion estimated.

YouTube revenue: $3.81 billion versus $3.78 billion

Cloud revenue: $3.01 billion versus $3.06 billion.

Google CEO Sundar Pichai, along with Mark Zuckerberg, was subject to more substantial questioning at Wednesday’s congressional hearing over Google’s monopolistic business practices. Although not much came of it, it is likely at higher risk of being broken up than its Big Tech counterparts, though that day still seems a long way off. Google’s stock has fared well during the pandemic, rising 12% YTD.

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