The next few weeks will feature a blur of tech company earnings calls, as everyone from Tesla to Twilio report their financial performance for the first three months of the year.
Wall Street will be focused on headline numbers like revenue and earnings per share, as well as any surprises, like Meta’s $50 billion dividend last quarter. It’s easy to get lost in the blizzard of numbers. But oftentimes, there’s one particular item in the report that speaks to the overall health and prospects of the business. Here are a few areas that I’ll be keeping an eye on as the Big Tech earnings season kicks off:
Alphabet: Search advertising may be Google’s big moneymaker, but growth in that business has stalled in the single digits in recent years. The rise of generative AI threatens to further dent the search business—it’s not at all clear whether ads will play as central a role in a world where people get their information by conversing with an AI chatbot. What kind of near-term and medium-term growth prospects does Alphabet’s management foresee for the company’s foundational search business?
Meta: Last quarter, Facebook parent company Meta revealed that China accounted for 10% of its ad revenue as a result of marketing blitzes by big Chinese firms like Shein and Temu. That’s something of a mixed blessing: At a time of heightened trade tensions between China and the U.S., Meta is running a risk by relying on too much Chinese wind in its ad sails. And with the fate of TikTok in the U.S. up in the air, a fresh surge of Chinese advertisers could be on the horizon for Meta.
Microsoft: How much lift can AI give Microsoft’s cloud? Microsoft’s Azure business grew 30% year on year in the final quarter of 2023. Six percentage points of that growth came from demand for AI, the company said, noting that it was double the rate in the previous quarter. The AI boost likely won’t double again to reach 12% this quarter—but it will be interesting to see if AI continues to juice customer cloud demand or if last quarter’s 6% pop was just a blip that levels out this quarter.
Apple: After four consecutive quarters of declining revenue, Apple finally returned to growth in the last three months of 2023. But there was one notable soft spot: China. Sales in China fell 13% year over year, with the company pointing to a slight dip in iPhone sales as one of the reasons. The situation appears to have gotten worse since then. Research firm Counterpoint estimates that iPhone sales in China fell as much as 19% in the first quarter, while Chinese rival Huawei grew a whopping 69.7%.
And with that, here’s what else is happening in tech today.
Alexei Oreskovic
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NEWSWORTHY
Microsoft ‘mini’ model. Microsoft today unveiled Phi-3, the latest generation of its homegrown generative AI model (which is distinct from the OpenAI technology it uses in its products as a result of its partnership with OpenAI). Phi-3 will be available in three sizes: mini, small, and medium. The mini version is small enough to fit on a smartphone and is as capable as OpenAI’s GPT 3.5, a company executive told the New York Times.
Meta’s Horizon OS comes to other VR headsets. Until now, Meta’s line of Quest VR headsets has been the only way to access Meta’s mixed reality operating system, Horizon OS. On Monday, Meta opened the gates so that other hardware makers can offer the OS on their headsets. According to CNET, Lenovo, Asus, and Microsoft will be making Horizon-compatible headsets. With Apple’s Vision Pro device now available to consumers, Meta is no doubt hoping the move will make it the Android of mixed reality.
Google fires more protesting workers. Google CEO Sundar Pichai declared last week that the company is not a “personal platform” for workers to push their causes or disrupt the workplace. And he carried through on the pledge (again) this week, firing more than 20 employees who protested the company’s business ties to Israel, according to the Washington Post. That brings the total number of fired workers from the protests to 50.
ON OUR FEED
“I just find it extraordinary that this bloke thinks he’s above the law and above common decency.”
—Australian Prime Minister Anthony Albanese blasts Elon Musk in an interview with Sky News Australia. Australian regulators ordered Musk’s social network, X, to remove videos of a stabbing that occurred in a church. X has argued that the country can regulate the content available in Australia, but can’t force the platform to remove content globally.
IN CASE YOU MISSED IT
Spotify CEO Daniel Ek surprised by how much laying off 1,500 employees negatively affected the streaming giant’s operations, by Ryan Hogg
Tesla will try to stem the bleeding on its earnings call after its worst sales quarter in four years, a round of price cuts, and a sinking share price, by Paolo Confino
EU warns it’ll suspend TikTok’s new Lite app for its ‘toxic and addictive’ watch-for-rewards feature that allegedly endangers kids, by Prarthana Prakash
OpenAI’s Sam Altman is funding a green-energy moonshot as AI’s power demands grow to ‘insatiable’ levels, by Dylan Sloan
Stripe CEO says he used to be a ‘misanthropic introvert’ and would still prefer to be a ‘cave dweller’ than work in the office, by Ryan Hogg
BEFORE YOU GO
A “special Apple event.” Mark your calendars for May 7, when Apple says it will be hosting a livestreamed event at the early hour of 7 a.m. Pacific Time. The event invitation features an image of a pencil, which, according to The Verge, indicates that this event will be focused on iPads. Apple hasn’t updated its iPads in nearly two years, and iPad sales plunged 25% in Q4.
Those waiting for Apple’s entry into generative AI will probably have to wait a bit longer though. The company’s big AI product launch, hinted at by CEO Tim Cook earlier this year, is not expected until Apple’s annual developer conference in June, according to media reports.
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