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A Look At Big Tech Earnings This Week: Apple, Amazon and Microsoft

On earnings week, MSFT, AAPL and AMZN delivered strong results, even if market reaction was muted. The Apple Maven lists the main topics during big tech earnings week.

The FAAMG group, once again, beat consensus estimates this earnings season. The Apple Maven live-blogged about Microsoft's, Apple's and Amazon's results. Below are a few highlights from each earnings report.

Microsoft Earnings: Outstanding results ≠ strength in stock

Microsoft ($MSFT) delivered revenues of $41.7 billion vs. consensus $40.85 billion, and adjusted EPS of $1.95 vs. consensus $1.78. The company also impressed with above-consensus guidance for fiscal fourth quarter.

Figure 1: Microsoft's Q3 financial summary.

Figure 1: Microsoft's Q3 financial summary.

As usual, Microsoft delivered strong results across the board, without one part of the business lifting extra weight to compensate for weakness somewhere else. Consistency has been a byproduct of Microsoft's balanced business model across cloud, business application software, personal computing and more.

Unfortunately for Microsoft investors, delivering an earnings smasher did not mean much for share price. The stock fell as much as 4% in after-hours trading, and $MSFT failed to reach $2 trillion in market cap.

Apple Earnings: No weakness to be found

The Cupertino company posted impressive revenue growth of 54% and EPS of $1.40 that lavishly beat consensus of $0.98.

Apple ($AAPL) presented outstanding fiscal second quarter numbers. There was not material weakness to be found anywhere. All product and geographic segments were up year-over-year by at the very least 24%, and by as high as 94%.

See both charts below:

Fiscal 2Q21 Rev. growth by major/geo segment.

Figure 2: Fiscal 2Q21 revenue growth by product and geographic segment

Clearly, Apple benefited from the stay-at-home trends, a byproduct of the 2020 pandemic, pushing iPad, Mac, iPhone and Services sales higher. Also, the delayed timing of the iPhone 12 release served as somewhat of a tailwind.

The stock ended earnings day down -0.6% during the regular session and up +2.2% in after-hours trading, for a net gain of about 150 basis points over the S&P 500. But any early sign of share price support dissipated later in the week.

Amazon Earnings: AWS bullishness

The e-commerce and cloud giant posted impressive revenues of $108.5 billion. EPS of $15.79 lavishly beat consensus of $9.64 and more than tripled year-over-year. Amazon stock ($AMZN) ended the day slightly higher during the regular session and up another +3% in after-hours trading.

Strength in AWS was probably the highlight, at a growth rate of 32% that very easily beat consensus by a good 10 percentage points, plus solid margins of over 30%.

This is probably the key reason why Amazon stock climbed in after hours, even after shares had spiked 13% in the previous month alone. The market tends to pay remarkably close attention to the growth pace in the cloud business. 

See table below, and notice the outstanding Q1 growth figures in column 2:

Figure 3: Amazon's Q1 segment breakdown.

Figure 3: Amazon's Q1 segment breakdown.

The combination of (1) a recovering economy, especially in the US, and (2) the COVID-19 pandemic that has been causing a shift in shopping habits favors online retailers. Among them, Amazon is a clear winner, possibly the top player.

Therefore, Q1 felt like another holiday period for the Seattle-based behemoth, as total quarterly revenues surpassed $100 billion only for the second time ever.

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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting The Apple Maven)