Tech earnings preview: What to expect when Alphabet, Amazon, Apple report on Thursday
Thursday is a big day for tech earnings as Alphabet, Amazon and Apple all are set to report their quarterly results.
SEANA SMITH: Well, it is a big tech trifecta. Amazon, Apple, Alphabet all reporting after the bell tomorrow. Here with what we can expect, we have Yahoo Finance's seniors tech reporter Allie Garfinkle and tech editor Dan Howley here. We got all of your bases covered because tomorrow is certainly going to be a busy day after the bell. Allie, let's kick it off with you. Ladies first here. Amazon-- I know you're closely watching those results. What are the most important things we need to know?
ALLIE GARFINKLE: So, thank you, Seana. Ladies-- I like ladies first. So I want to jump right in to start by talking about cloud. I've sort of identified three things, but I want to start with cloud because it has been a stalwart of Amazon's business for so long. But in this key quarter, they are fighting an uphill battle when it comes to cloud. AWS has done well for a long time, but we only need to look to last week to see some doom and gloom. In Microsoft's earnings call, the company warned of decelerating cloud growth. So that doesn't read through great for Amazon.
Second thing to watch, key retail growth. Retail growth would be a major, major step in demonstrating the resilience of that business. I was actually looking at some data that was compiled by Mastercard. And it said that US e-commerce sales increased 11.3% year over year this quarter. So it's desirable and possible to see that retail growth. The last thing is, keep an eye on margins, both in ads and in retail. So they've laid off a lot of people, 18,000. There's going to be increased pressure on them because of those layoffs to get margins right.
Also, if growth continues to be slow in retail and ads, those margins are going to matter maybe more than ever. Bottom line, after a rough year for Amazon, I'm laying out what success looks like, but they're not the only ones who've struggled.
DAVE BRIGGS: All right, ladies first. I guess that leaves us-- I don't know-- second. We're just--
SEANA SMITH: You guys are on the curve outside, you know?
DAVE BRIGGS: You're looking at Apple, and when it comes to Apple, you've got your eye on China and the impact of the COVID lockdowns. How much do you think it did impact demand?
DAN HOWLEY: Yeah, it seems to be that there's the story of the China lockdowns and the issues with availability and then demand. So there's-- it seems to be that there's these two kind of coming together to be a larger issue. And right now, we're looking at expectations of iPhone revenue to be 68.3 billion. That would be below what we had last year at 71.6 billion. So overall, the projections are for revenue to be lower for the first time in 2019. Sorry-- since 2019.
Since then, if you go back and look at all of Apple's reports, it's record quarterly revenue, record quarterly revenue, record quarterly revenue. So we're going back to 2019 when they actually saw a decline, a year over year decline. And that's because of these problems here. We're looking at the broader smartphone market, down 14.9% as far as Apple iPhone shipments go globally. That's 85 million units.
And so this is from IDC's global smartphone tracker. It's not Apple's own numbers. We'll find out more about that tomorrow after the bell, but that's a great indicator of what's going on. And they saw the market in general decline, though Apple market share rose, so it could be offset. But, you know, Mac revenue not expected to do particularly well. They didn't really introduce any new stuff for the Mac in the quarter. We just got that in the past few weeks, and then iPhone revenue. So we're looking at this Q1. It includes the holiday season. Not great when-- the holiday season for Apple if we're talking about lower year over year iPhone sales.
SEANA SMITH: Yeah, certainly not great. It's tough, but Allie, you can't necessarily count Apple out. They deliver time and time again, it seems like.
ALLIE GARFINKLE: No, you really can't count Apple out. And we've seen it over and over again. It's a bad time in the market. And then Apple makes it through. That said, they are dealing with some issues they haven't dealt with before-- for instance, the China problems, and for example, labor issues that they've been reportedly fighting against hard. So tomorrow is going to be a big day for all of us, and especially Amazon, Alphabet, and Apple.
SEANA SMITH: Yeah, well, you mentioned Alphabet there. That, of course, is the other, the third big tech story that we will be watching. The list goes on and on and on. Cloud growth and ad revenue are going to be in focus there.
DAN HOWLEY: Yeah, I think I'm going to need a drink after tomorrow.
SEANA SMITH: We all will.
DAN HOWLEY: Yeah, so we're looking at revenue ex TAC, which is revenue with the exception of Traffic Acquisition Costs. That is expected to come at $63.2 billion. That's going to be better potentially than what we had last year, $61.9 billion. Earnings per share is going to be kind of difficult to get out immediately because they had that 20-to-1 stock split in July. So you can't really compare $1.20 to $1.69 that they had last year. But we're going to be looking at what happened as far as YouTube ad revenue goes and then general ad revenue.
So now we have this mixed picture of the digital advertising market. And I saw some folks tweeting this is a vindication of the digital ad market because of Meta's results. Well, then what happened with Snap, right? So is it that, like I said previously, that Meta figured out how to get past the issues that arose with Apple's privacy changes? Or is it that Meta just happened to do well, and Google won't?
So we have to-- or Alphabet won't. We have to see where that goes. But I think once we get a sense of where Alphabet is, where YouTube is, we're also going to be looking at the cloud because they're trying to build that up, and they're just-- they're not making-- I don't think they've made any money off of that yet.
DAVE BRIGGS: When it comes to the changes, Brent Thill from Jefferies said that is done. They are through it, and they have figured it out when it comes to Meta figuring out the Apple privacy changes. Dan, Allie, what are we drinking tomorrow?
ALLIE GARFINKLE: Margaritas.
DAN HOWLEY: White Claw.
DAVE BRIGGS: OK--
ALLIE GARFINKLE: You're like always White Claw. You love White Claw.
SEANA SMITH: White Claw, OK.
DAN HOWLEY: Black cherry.
ALLIE GARFINKLE: I'll bring you a White Claw.
DAVE BRIGGS: I'm going to go with this one here, OK? I'll bring you one of those, though.
DAN HOWLEY: Black cherry.