The National - Amazon-led Big Tech pack earning up to $983,000 a minute

US technology companies posted a significant increase in their first-quarter revenue this year, even as the global economy faces a rocky recovery and lingering supply chain disruptions led to a shortage of chips.

After a tumultuous 2022, US technology stocks have surged by double digits since the start of the year, marking their best first quarter since 2012, according to industry analysts.

“This was partly aided by the turmoil in the banking sector, which ultimately fuelled a rotation back into the tech sector … about 81 per cent of the 138 companies that have reported first-quarter earnings so far have surpassed expectations,” Vijay Valecha, chief investment officer at Century Financial, told The National.

“Microsoft and Alphabet kick-started the Big Tech earnings season with a positive surprise. … major outliers among FAANG [Facebook, Amazon, Apple, Netflix and Google's parent company Alphabet] and tech stocks so far are Microsoft and Meta,” he added.

Here's a look at how much tech heavyweights and by comparison Tesla, the world's largest electric vehicle maker by market value, made per minute in the first three months of the year.

Alphabet

Alphabet earned more than $538,580 a minute on the back of strong growth in its search engine business and its cloud unit becoming profitable for the first time. First quarter sales jumped to $69.8 billion, beating the average $68.9 billion estimate of analysts. The stock has gained nearly 21 per cent since the start of the year and the company's market value at close of trading on Thursday stood at $1.37 trillion.

Microsoft

The Redmond-headquartered company earned $408,179 a minute in the last quarter, driven by a strong cloud business and surge in LinkedIn revenue. The company earned total revenue of $52.9 billion during the January-March period, exceeding analysts' expectations of $51.02 billion. Its shares have jumped over 27 per cent year-to-date and its market value reached $2.27 trillion as of Thursday.

"The latest earnings underline the strong growth outlook for artificial intelligence," UBS chief investment office analyst Sundeep Gantori wrote in a research note.

"Alphabet and Microsoft mentioned AI more than 50 times each during their first quarter earnings conference calls. We expect the broad AI hardware market to grow 20 per cent a year to reach $90 billion by 2025. We see AI as a horizontal technology that will have important use cases across applications and industries."

Tesla

The world's biggest EV maker, Tesla, delivered more than 422,875 vehicles in the first quarter, earning the company more than $179,783 a minute. Its revenue during the January-March period increased 24 per cent to more than $23.3 billion, exceeding analysts’ expectations of $23.2 billion. For 2023, the company aims to achieve more than 50 per cent growth rate and produce about 1.8 million cars.

“Tesla is trying to do what it needs to do … to keep up the growth [targets],” Edward Moya, senior market analyst at Oanda for Americas, said.

Its share price has rallied more than 48 per cent since the start of the year giving it a market value of $501.95 billion as of Thursday.

Netflix

Netflix earned a revenue of $8.16 billion in the first quarter, underpinned by a 5 per cent surge in the number of paid subscribers between January and March. The world's largest streaming company made $62,962 a minute during the period. Its stock has jumped 10.5 per cent since the start of the year and its market value stood at $144.85 billion.

Meta

Facebook’s parent company Meta netted more than $220,679 a minute in the three months to March 31. The number of Facebook’s daily active users and monthly active users jumped to 2.04 billion and 2.99 billion, respectively, as of March 31. The social media company’s revenue surged to $28.6 billion in the first quarter of 2023, after three consecutive quarters in which it had declined.

Its shares have soared more than 91 per cent since the start of this year and its market value stood at $611.99 billion as of Thursday.

Amazon

Amazon earned more than $983,024 a minute in the first quarter, securing the top rank among peers. The world’s biggest e-commerce company has benefited immensely from the rise in the number of people who opted to shop online in tandem with the pivot to digitalisation and contactless payments, boosted by the Covid-19 pandemic.

The Seattle-based company’s revenue during the first quarter rose to $127.4 billion, topping the average $124.5 billion estimate of analysts. This was the tenth consecutive quarter with more than $100 billion in sales.

Its share price has increased 28 per cent since the start of the year and the company's market value stood at $1.13 trillion at market close on Thursday.

IBM

IBM, which saw a surge in its software and consulting offerings, earned $110,339 per minute in the March quarter.

Its total revenue increased to about $14.3 billion, which was in line with analysts' estimates. Its market valuation stood at $115.18 billion.

Will the momentum continue?

Analysts say the Nasdaq-100's gains are expected to be short-lived due to the insufficient sustainability from cloud giants such as Microsoft and Alphabet. Although these two companies have a combined 20 per cent weighting in the index, their gains cannot be applied to the rest of the sector.

“Currently, only 30 per cent of the stocks in the index are trading above their 200-day moving average, whereas the S&P 500 has 48 per cent of its stocks trading above the same average,” Mr Valecha said.

“Moreover, the Nasdaq-100 is still trading at high valuations, with a current valuation of 28.5 times forward earnings, which is above its 10-year average of 25.7”.

The Nasdaq-100 is a stock market index consisting of 101 equity securities issued by 100 of the largest non-financial companies listed on the Nasdaq stock exchange.