Sales from Amazon and Apple exceeded expectations, encouraging investors that the digital behemoths will be able to withstand slowdowns in the world economy.
In a trading update, Amazon predicted that increasing the cost of its Prime membership would improve its bottom line, while Apple stated that demand for its crucial iPhone remained robust.
Despite prices increasing at a high rate, both businesses said they were making progress in managing operating costs.
Shares rose as a result of the updates.
Customers avidly monitor Apple and Amazon’s quarterly updates to see how they are responding to the economy.
Official data released on Thursday showed the US economy contracted for the second consecutive quarter, a development that in many other nations would be regarded as an economic recession; however, the US requires other data to reach that determination.
According to Apple’s chief operating officer Luca Maestri, “our June quarter results continued to illustrate our ability to run our business efficiently despite the challenging operating environment.” Apple also anticipated growth to pick up again in the months to come.
Sales growth has, however, slowed significantly from last year for both businesses, and profits have decreased.
As it struggled with Covid-19 lockdowns in China, Apple’s profits fell by almost 11% to $19.4 billion (£15.9 billion), while Amazon lost $2 billion due to changes in the value of its investment in electric vehicle manufacturer Rivian Automotive.
Tim Cook, the CEO of Apple, said the company was receiving “a mixed bag” of economic signals, with the demand for iPhones remaining stable but declines in other sectors like digital advertising.
“We feel extremely happy about the growth that we put up when you consider about the number of hurdles in the quarter,” he said.
Between April and June, total sales of Apple goods and services increased by 2% on a yearly basis, reaching $83 billion. As supply issues hampered sales of other items, iPhone sales continued to drive the company’s profits.
Additionally, the company’s services division, which includes Apple Pay and its streaming music and television services, expanded by 12%.
Amazon reported that despite recent challenges to its e-commerce sector, its revenues were up 7% to $121.2 billion. The second consecutive quarter of declining online sales saw a 4 percent reduction.
The corporation is still protected, though, by the success of AWS, its cloud computing branch, which witnessed a 33 percent increase in sales.
With its online sales slowing down and a warning that it had overspent on hiring staff and expanding its facilities in the hope that the pandemic-era purchasing patterns would persist, Amazon alarmed investors in the spring.
But this time, it offered a more upbeat forecast.
“Despite continued inflationary pressures in fuel, energy, and transportation costs, we’re making progress on the more controllable costs we referenced last quarter, particularly improving the productivity of our fulfilment network,” said chief executive Andy Jassy.
Amazon said its e-commerce sales were poised to look especially weak because Prime Day, when discounts typically drive a surge of buying, was moved from June to July. “Big tech’s been a mixed bag this earnings season, but Amazon proved that the strong can survive even the toughest environments,” said Laura Hoy, equity analyst from Hargreaves Lansdown.
Apple and Amazon are too big not to be affected by signs of slowdown in the global economy, said Scott Kessler, global sector lead at Third Bridge.
However, they have some special power due to their stature to overcome those obstacles, especially when haggling over costs.
Since they are frequently one of the major buyers, he added, “Apple’s done an excellent job of managing those expenditures.”
Christie Pitts, a general partner at the technology investment firm Backstage Capital, however, told the BBC that Amazon had some pressure on its results, in part because of the impact of inflation, “since customers have less disposable money to spend on impulsive items.”