Microsoft, Facebook and Apple have all demonstrated the resilience the USA’s tech giants have been showing in the face of the coronavirus pandemic-inspired economic slump with robust Q1 results. During the previous two stock market downturns, expensive, some might say over-valued, tech stocks have been hit harder than any other sector.
But this time, reflecting how integral digital products and services have become to our every day lives over the past decade, that hasn’t been the case. While the technology sector has also seen average share prices take a hit, it has outperformed the wider market.
Over the past 2 days, three of the largest U.S.-based tech stocks, Microsoft, Apple and Facebook, have all published results and offered forward guidance that has reassured investors they are and will continue to weather the storm well.
Facebook told investors on Wednesday that its advertising business stabilised in early April. Digital advertising sales had plummeted in March but the company said “signs of stability”, were apparent over the first three weeks of April. The market reacted by driving the company’s share price 10% higher.
After beating analyst forecasts, the social media giant’s share price is currently only 8.3% off its mid-February peak, compared to 14% for the broad-based S&P 500 benchmark. Over the first three months of the year, Facebook’s quarterly profit was up significantly on that of a year earlier, at $4.9 billion compared to $2.4 billion. However, last year’s profit was hit by the booking of a $3 billion charge. Revenue was also up though, to $17.4 billion compared to $14.9 billion over the same period of 2019.
Microsoft was also able to offer tech investors some relief with an encouraging first quarter the Covid-19 pandemic was reported to have had a ‘minimum’ impact on. Growing revenues in the company’s Azure cloud computing business and networking software adopted by more teams working from home were both major positives, as was the company’s Xbox gaming business.
Profits and revenues for the quarter were both up on 2019. Profits came in at $10.8 billion, a $2 billion improvement on the $8.8 billion generated 12 moths earlier and revenues climbed to $35 billion from $30.6 billion. The Microsoft share price rose 4% after the results were published.
As of the close of market on Thursday, Microsoft’s share price was only 5% off its historical high of February.
Meanwhile, Apple yesterday reported Q1 results roughly in line with those of 2019. Group sales for the 3 months to the end of March were $58.3 billion compared to $58 billion over the same period a year earlier. iPhone sales were slightly down, bringing in $29 billion to $30.9 billion in 2019 but that was compensated for by growing sales of services including iCloud storage, the App Store, music streaming, and subscriptions to the new Apple TV+ television and film streaming service.
Sales in China were, at $9.5 billion, only $1 billion lower than last year, which was better than expected for a region that went into lockdown in late January, rather than the March start in Europe and the USA. CEO Tim Cook commented:
“When the lockdown went into effect at the end of January, we saw a very steep falloff in demand for the month of February. We saw a nice improvement in March and a further improvement in April. China is headed in the right direction.”
Apple’s share price is down around 10% on its 2020 high from February, which is still a significant improvement on Wall Street as a whole.