Technology stocks have sunk this year, and Jerome Powell of the Federal Reserve finally said on Wednesday that he could see higher interest this year to slow inflation, a prospect that could make more further damage.
The macroeconomic backdrop going into 2022 has set up an interesting revenue season for tech. Netflix NFLX,
kicked things, and its release landed with a thud.
But let’s be realistic. Netflix’s integration with FAANG is more for convenience than its size. In other words, tech is more resilient, stable and stable than the markets show.
If you want to get your arms around current and projected economic conditions for businesses and consumers, perhaps looking at some of the tech giants that reported this week provides a clearer picture. perspective.
Here is my perspective on three companies: IBM IBM,
Microsoft MSFT,
and Intel INTC,
IBM: Big Blue came first this week, and given Kyndryl’s recent spin-off, it would be easy to conclude that the company will need a few quarters to spin the ship.
However, the company posted one of its best quarters in a decade, delivering 6% revenue growth while seeing its hybrid cloud revenue jump 16%. With each passing quarter, Red Hat’s $ 34 billion acquisition continues to get better, and the loss of assets in the Kyndryl deal is smarter.
CEO Arvind Krishna’s vision of cloud- and software-focused IBM is beginning to fulfill its promise. And while markets may be teetering, IBM seems to be better positioned than it has been in a long time.
Microsoft: Based on its past years presentation, I don’t think Microsoft was surprised to have another strong quarter. However, I suspect Street will look more at Microsoft’s guidance as a bellwether for next quarter of technology revenues.
I recently opined here about Microsoft’s overall strength and position on the heels of its announcement on Activision. The result of this quarter further strengthened the momentum of the company.
There were: Strong beats in revenue, operating income, net income and diluted revenue, led by continued 45%-plus growth in Azure and strong growth in almost all segments, including productivity, applications in business, windows and intelligent cloud. The company guided revenue of $ 48.5 billion to $ 49.3 billion, which is more than the agreed $ 48.23 billion.
If a $ 68.7 billion all-cash deal to get Activision into the abyss of significant Fed tightening isn’t a bullish sign, this quarter’s results and guidance are certain.
Intel: Although semiconductors were cut off for most of 2021, Intel and its investors have never benefited from the latest boom in chip stocks. The goalposts for Intel continue to move, and while CEO Pat Gelsinger has been adamant to put more clarity and direction into the company’s strategy, the market continues to look skeptical.
Intel’s results this quarter and for its entire year, however, we are anything but bearish. The company lost both the top and bottom lines, raising the guidance as well as the dividend. This is a record quarter and year for Intel.
Furthermore, server shipments are stable, rising 20% year over year, and the company has made significant quantitative steps for its 10 nanometer (nm) server chips. The modest decrease in margins is the most likely focus of any negativity from these results, most of which can be attributed to the move to 10nm and Intel 4. Overall, Intel’s results have more positives than negatives.
The results and technology guidance seem obvious
On average, all of these companies far exceeded expectations, and those who provided guidance were more optimistic.
Tech helps streamline workflows, provide pathways to innovation, and simplifies enterprise reach to consumers. Even in recessionary markets, tech will be sought to make operations more efficient, so I also thought ServiceNow’s NOW,
The numbers, reported on Thursday, look stunning. I can say the same thing for Microsoft, Intel and IBM.
The so -called tech wreck makes good headlines, but perhaps this is the moment to remind investors that tech would be OK. The Nasdaq has had 66 corrections since 1971 but has still risen nearly 7,400% over the past 40 years.
In short, Innovative technology companies continue to outperform, and while markets may not always reflect the value caused by tech, those gyrations are temporary, and tech will be anything. but a destruction.
Daniel Newman is the principal analyst at Futurum Research, providing or providing research, analysis, advice or consulting to Microsoft, Nvidia and dozens of other companies. Neither he nor his company holds any equity positions in the companies mentioned. Follow him on Twitter@danielnewmanUV.
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