Tech giants devalue $550 billion on Wall Street

Tech giants devalue $550 billion on Wall Street

The presentation of the financial results for the last quarter shows sharp growth breaks in the main technology companies in the United States, scaring investors and reflecting on the stock market price.

The slowdown in the global economy, inflation and price rises, as well as the uncertainty for the future on the part of consumers, are reasons given for the poor financial results recorded by the major technology companies in recent quarterly earnings reports. Alphabet, the parent company of Google, for example, grew 6%, with profits of 14 billion dollars, which was considered the worst financial result of the last decade.

But the worst results came from Meta, Mark Zuckerberg’s company, with revenues down 4% after a 1% drop in the previous quarter. His continued commitment to the metaverse, in an investment that has been seen as a “broken bag”, has put the leader in the crosshairs of Wall Street analysts. There are still doubts about the reason to continue investing in AI and the metaverse, without a clear idea of ​​when it will show results. And with that, the advertising business is eroding.

This uncertainty in the technology industry has scared investors and according to the Financial Times, the stock market valuation of the main technology companies has dropped by 550 billion dollars. That is, the combination of the devaluation of Alphabet, Amazon, Apple, Meta and Microsoft.

Analysts are not looking favorably on large investments in the metaverse, and as a Jefferies expert points out, there are too many experimental bets versus bets on proven cores. Morgan Stanley analysts, in a note to investors, say that they are breaking with their normal practice of not assigning an immediate derogatory ranking in response to bad news, because Meta’s investment plans may be changing paradigms.

What is certain is that Wall Street responded to the presentation of Meta’s accounts with a tumble of 22% in the valuation of the technological giant, that is, 80 billion dollars in the cut of its market value.

In addition to Meta, Alphabet also continues to invest in AI, having bucked the cost-cutting trend and hired 13,000 new employees in the last three months. And this is against the recommendation of its leader, Sundar Pichai, who has called on the company to be more focused on its spending, reports the FT.

Of the group of technological giants, however, Microsoft was the one that most depreciated on Wall Street. The giant lost 174 billion dollars of market value, after its presentation of accounts. In the three months ending in September, the first of the 2022-2023 fiscal year, Microsoft improved revenues by 11% to $50.1 billion, above market expectations but below the company’s growth rates in recent years. five years. Earnings dropped 14% to $17.6 billion and earnings per share also dropped 13% to $2.35.

The cloud business saw revenue growth of around 24% to US$25.7 billion. Still, Microsoft says the cloud computing business is slowing down faster than expected. And being considered the business with the greatest resilience potential, this news did not go down well in the investment market, being one of the reasons for the tumble on Wall Street.