Big Tech Q3 Earnings: Top Questions for the CEOs of Google, Meta, Apple, Amazon

23.10.2023 23:58

New York Observer

How is the antitrust trial going? What comes after the "year of efficiency"?

It’s Big Tech earnings season, this year against the backdrop of a volatile stock market and uncertain economy. Investors will look for key financial updates from the tech giants that have fueled the rebound of S&P 500 so far in 2023 and, more importantly, what their leaders think the future holds—for both their companies and the economy.

Google (GOOGL) parent Alphabet (GOOGL), Meta (META), Microsoft (MSFT), Meta, Apple (AAPL) and Amazon (AMZN) are all scheduled to report financial results for the three months ended September this week. Expectations for outperformance are high; of the 86 companies in the S&P 500 index that have reported third-quarter earnings so far, 78 percent have beat analysts’ estimates, according to the LSEG data reported by Reuters. And after the financial release, CEOs and CFOs will answer investors’ questions on earnings calls.

Here are the questions Big Tech CEOs are expected to address in Q3 ’23 earnings:

Alphabet: How is the antitrust trial going?

Google parent Alphabet is scheduled to report earnings tomorrow (Oct. 24). Investors are eager to hear CEO Sundar Pichai give an update on the company’s ongoing legal battle against the U.S. government.

The Department of Justice sued Alphabet for squashing competition in a historic antitrust suit in 2020, and the trial finally began earlier this month. The government alleges that Alphabet crushed competitors in online search by forming exclusionary deals with smartphone makers, like Apple, that make Google the default search engine on their devices. Alphabet has argued that it simply has a superior product. So far, access to the trial is sporadic as the court keeps a lot of sensitive business information confidential.

Google faces similar antitrust probes in its major foreign markets, too. Today (Oct. 23), the Japanese government launched an investigation into Google’s ties with Android phone makers over search engine deals. The outcomes of these probes could drastically change the global online search market.

Microsoft: Is the $10 billion OpenAI investment paying off?

Microsoft will report earnings on Oct. 25, a day after Google. CEO Satya Nadella will likely field questions on the company’s progress in artificial intelligence, which he has made a cornerstone of Microsoft’s business strategy. In the past year, Microsoft has committed to a $10 billion investment in OpenAI, the company behind ChatGPT, and incorporated OpenAI’s advanced language models in the Bing search engine and Edge browser. Investors want to know how well those investments are paying off.

Meta: What comes after the “year of efficiency”? And is anyone using Threads yet?

Meta will report earnings on the same day as Microsoft (Oct. 25). At the beginning of the year, Meta CEO Mark Zuckerberg said 2023 would be the “year of efficiency” marked by cost cuts and cautious spending. The measures worked; Meta’s stock price is up more than 150 percent this year, beating every Big Tech peer. As 2023 draws to a close, is Zuckerberg considering new product investments and hiring again for 2024?

Investors also want to know whether Threads, Meta’s text-based platform to compete with Elon Musk’s X, retained users over the past quarter. At Meta’s last quarterly earnings call, Zuckerberg admitted Threads saw many challenges following its explosive debut, and his team was working hard to keep users on the platform.

Apple: How is the iPhone 15 selling? Should investors worry about China’s probe into Foxconn?

Apple is scheduled to report earnings on Oct. 26. A central item will be the initial market reaction to the iPhone 15 lineup launched in September. iPhone sales make up more than half of Apple’s total revenue. So, early iPhone 15 sales data will gauge Apple’s financial soundness in the current quarter and next year.

CEO Tim Cook may also be pressed to answer questions about a new probe in China into Apple’s largest supplier, Taiwan’s Foxconn, and whether it could affect Apple’s production. Foxconn has many factories in mainland China. The Chinese government could exert a considerable impact on Apple’s supply chain, as seen during the country’s Covid lockdown in 2022.

Amazon: Is Andy Jassy’s ambitious return-to-office mandate working?

Also reporting earnings on Thursday is Amazon. Like some Big Tech peers, Amazon will face questions about its game plans in A.I. and antitrust concerns. Last month, the Federal Trade Commission and 17 states sued the e-commerce giant for using its monopolistic power in online retail to charge high prices. CEO Andy Jassy may be asked about his latest effort to bring employees back to the office. Earlier this week, reports surfaced that Amazon managers were given permission to fire any employees who fail to report to the office at least three days a week.