San Francisco, Oct 27 (AFP\/APP):US tech titans looking to the future are seeing growth take a beating in the face of foreign competition and a tough economy in the here and now.<\/p>\n
With Apple and Amazon due to report quarterly earnings after the close of market Thursday, shares of Meta and Google-parent Alphabet have tanked after disappointing financial results this week.<\/p>\n
“This week will go down in the history books of earnings season as one of Big Tech’s worst and ultimately could be a ‘fork in the road moment’ for the stalwarts looking ahead,” Wedbush analyst Dan Ives said in a note to investors.<\/p>\n
Management teams will need to “quickly adjust to a much different background” or risk losing their luster for investors who have bet on them for the past decade, he said.<\/p>\n
In the case of Facebook-parent Meta, the decline comes as chief Mark Zuckerberg rolls the dice on building up the metaverse long-term.
\n“Facebook shifted to Meta, so they took their eye off the ball,” tech analyst Rob Enderle of Enderle Group said.<\/p>\n
“In a way they shot themselves in the foot, and allowed TikTok to advance.”<\/p>\n
Meta shares were down some 22 percent by mid-day Thursday to $100.52. Over the past year, the price has plunged nearly 67 percent.<\/p>\n
Thursday’s drop came one day after the company, already facing stagnating user numbers and cuts in advertising budgets, said its profit had more than halved in the third quarter from a year earlier, and that it plans “significant changes” to bolster efficiency.<\/p>\n
The social networking giant also said revenue slipped from the same quarter a year earlier.<\/p>\n
Zuckerberg, while admitting the company is navigating “some challenging dynamics,” said on an earnings call Wednesday that “our product trends look better from what I see then some of the commentary I’ve seen suggests.”<\/p>\n
He said priorities will include artificial intelligence that powers recommendations at offerings such as its short-form video feature Reels, launched in response to TikTok, which is owned by China-based ByteDance.<\/p>\n
TikTok is eating into ad revenue at Meta and Google, but the US tech giants are still way ahead in that market — for now, according to analysts.<\/p>\n
– Party over? –<\/p>\n
Alphabet this week also reported quarterly earnings that fell short of market expectations as belts tightened in the digital ad market that drives its revenue.<\/p>\n
The company said ad revenue that grew just 6 percent when compared with the same period of last year.<\/p>\n
Aside from one period at the start of the Covid pandemic, that would mark the weakest revenue growth at Alphabet for any quarter since 2014.<\/p>\n
The earnings report showed that ad revenue at YouTube was slightly lower than it was in the same quarter a year earlier, despite a hot trend of people watching video on-demand and snippets on TikTok.<\/p>\n
Alphabet shares have sunk 36.4 percent in the past year, and were trading at $92.79 mid-day Thursday.<\/p>\n
Alphabet and Google chief Sundar Pichai said on an earnings call that he sees this as a moment when “you take the time to optimize the company to make sure we are set up for the next decade of growth ahead.”<\/p>\n
Like Meta, Alphabet is also looking to the future: in its case, investing in artificial intelligence that Pichai says will transform its offerings, and putting resources into “big bets” such as life sciences arm Verily and self-driving cars at Waymo.<\/p>\n
Apple’s data privacy changes have also hit the big tech platforms, reducing leeway for ad personalization.<\/p>\n
Meanwhile, Meta and Alphabet’s focus on the long-term has left openings for hungry competitors, Enderle contended.<\/p>\n
“It is like watching a sports team loses not because they are facing better players, but because the team’s members decide to go out and party every night,” he said.<\/p>\n
“If you are not focusing, someone is going to come up and take customers away from you; it is TikTok now but it could easily be someone else.”<\/p>\n","protected":false},"excerpt":{"rendered":"
San Francisco, Oct 27 (AFP\/APP):US tech titans looking to the future are seeing growth take a beating in the face of foreign competition and a tough economy in the here and now. With Apple and Amazon due to report quarterly earnings after the close of […]<\/p>\n
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