Contrasting June quarter results from tech giants Apple and Amazon were reported on Thursday. While Apple produced a weak set of numbers that met market expectations, Amazon showed a return to strong growth, resulting in a significant increase in its shares during after-hours trading.
Apple's shares were down 3% after hours as analysts noted concerns about iPhone sales, despite a strong contribution from the company's still-growing services business. On the other hand, Amazon's shares jumped over 8% in after-hours trading after the company's sales grew 11% year-over-year to $134.4 billion for the second quarter. The company's Prime Day sale performed better than expected, and an upbeat outlook for the third quarter further boosted investor confidence.
Amazon's ad business brought in $0.68 billion in sales, up 22% from the same period the previous year, while AWS (Amazon Web Services) revenue jumped to $22.1 billion. This double-digit growth marked a turnaround after several quarters of single-digit expansion. CEO Andy Jassy attributed some of the improvement to AWS, which saw customers shifting from cost optimisation to new workload deployment.
Amazon reported net income of $6.7 billion for the quarter, a significant improvement from the loss of $2 billion in the same period in 2022, partly due to a markdown on the company's investment in electric vehicle company Rivian. The company had undertaken layoffs and facility closures to reduce costs and focus on rightsising expenses.
Looking ahead, Amazon forecasted current-quarter net sales between $138 billion and $143 billion, which surpassed analysts' expectations and contributed to the rise in its shares after hours.
On the other hand, Apple's June quarter numbers exceeded Wall Street expectations for both earnings and sales. The services business, which includes Apple TV+, Apple Music, Apple Fitness, Apple Podcasts, Apple Books, Apple Cloud, and the App Store, experienced 8% growth, with paid subscriptions surpassing one billion for the first time.
Overall, Apple's sales fell 1% year-over-year to $81.8 billion, but the services division contributed positively to the revenue. However, revenues from key products like iPhone, Mac, and iPad were all down year-over-year. Apple experienced growth in sales in China and Europe during the quarter but saw lower sales elsewhere.
Apple's net income edged up from $19.442 billion in the June 2022 quarter to $19.881 billion in the current quarter. iPhone sales totalled $39.7 billion, below expectations and down 2% from the previous year, as consumers anticipated the release of the new iPhone 15 in the fourth quarter, causing a slowdown in sales.
Apple didn't provide official guidance for the future, citing continuing uncertainty. However, its reported results were stronger than previously implied in May, indicating an improvement in overall economic conditions.
Apple shares have performed well on Wall Street, rising nearly 50% this year. The company's market value reached $3 trillion in July, making it the first company to reach the $2 trillion and $1 trillion milestones in 2020 and 2018, respectively.
