A rapid shift to digitization due to Covid-19 has handsomely benefited the world’s biggest tech companies. Yet even as the pandemic eased, they still minted record sums of money.
What’s happening: Yesterday’s “Before the Bell” focused on how Tesla (TSLA) celebrated earning more than $1 billion last quarter. Amazon (AMZN), Google parent Alphabet (GOOGL) and Microsoft (MSFT) just announced that they netted a combined $57 billion in profit during the same period. “That level of profitability at the current scale is difficult to comprehend,” Bespoke Investment Group said of Apple’s $21.7 billion haul in a note to clients.
Google, which earned $18.5 billion, continued to be fueled by massive demand for online advertising as consumers spent more time shopping on their phones and laptops. The company’s core search advertising business posted revenue of $50.4 billion, a 69% increase from the year prior. Ad revenue from video platform YouTube surged 84% to $7 billion. Apple, meanwhile, trumped Wall Street’s expectations when it reported that iPhone sales jumped 50% year-over-year to $39.6 billion. That’s especially significant given that the June quarter is typically Apple’s slowest. The company also had to contend with a global shortage of computer chips.
Microsoft, for its part, was bolstered by the number of companies building out the infrastructure for remote work. Azure, Microsoft’s cloud business, logged revenue growth of 51%. CEO Satya Nadella said usage of its Teams communication platform has “never been higher,” with nearly 250 million monthly active users. “With 40% of workloads in the cloud today poised to hit 55% by 2022, we believe this overall [work-from-home] and hybrid environment shift has accelerated the cloud trend as more [executives] are being forced to face the new normal/reality for their respective organizations,” Wedbush Securities analyst Dan Ives said in a research note. Microsoft, he added, is ” firmly positioned to gain more market share.”