After disappointing results in 2022, tech giants are bouncing back from their post-pandemic slumps. Although some fell short of expectations regarding sales, GAFAM companies have more than doubled their profit and reported one of the best Q3 results ever.
According to data presented by Altindex, the combined net income of Apple, Microsoft, Alphabet, Meta, and Amazon jumped by 107% year-over-year and hit $86.5 billion in the third quarter.
The Numbers
The Big Five tech companies were some of the biggest winners during the early stages of the pandemic, with their online advertising, e-commerce, and consumer spending revenues surging amid the lockdowns. But 2022 brought a reality check, as their revenues and profits plunged after life returned to normal. However, their third-quarter results showed the tech giants hadn’t only recovered from their post-pandemic slumps, but some even managed to break their earlier records in terms of profit.
According to Statista data and official company filings, Amazon was the biggest winner in Q3. The retail giant`s profitability crisis began in 2021, when its income started to swing as new CEO Andy Jassy began a cost-cutting regime. But the earnings report for Q3 2023 showed it ultimately paid off. In the third quarter of the year, Amazon reported income of $9.9bn, a Q3 record and their second-best result ever. Statistics show Amazon saw its Q3 profit surge by 241% year-over-year, far more than any other GAFAM company.
Meta, one of the biggest losers among the tech giants in 2022, saw the second-highest year-over-year growth. The company broke its Q3 record from the pandemic, bringing in $11.6 billion between July and September, 164% more than in the year-ago period.
Although Alphabet saw its profits fall somewhat in 2022 compared to 2021, the company became even more profitable this year. Alphabet reported a net income of $19.7 billion in the three months ending September, or 46% more than in Q3 2022.
Apple, which didn’t suffer as many losses in 2022, saw its profit grow by 10% YoY to $23 billion in the third quarter. Microsoft followed with 2.7% growth and a $22.3 billion third-quarter profit.
Nearly $3T Added to Big Five’s Market Cap in a Year
Fantastic third-quarter results have helped the Big Five tech giants add trillions of dollars to their stock value. According to YCharts data, the combined market cap of Apple, Microsoft, Alphabet, Meta, and Amazon amounted to $9.62 trillion last week, or $3 trillion more than in November 2022.
Statistics show Meta saw the biggest market cap growth of all five companies, with its stock value surging by nearly 180% year-over-year to $844bn. All other tech giants saw double-digit market cap growth. The stock values of Microsoft and Amazon increased by roughly 45% year-over-year and hit $2.7 trillion and $1.48 trillion, respectively. Alphabet saw a 33% growth and hit $1.67 trillion in market cap last week. Apple follows with a 25% stock value increase and a market cap of nearly $2.9 trillion as of last week.
African Effect
Investments in the digital infrastructure of Africa have resulted in significant gains in digital access and internet use across Africa. Simultaneously, there exist notable deficiencies in connectivity inside and between African nations, as well as between Africa and the rest of the world. Without external actors, Africa’s digital infrastructure would struggle to handle the demands of a fast-growing tech-savvy population.
Due to their realization that Africa still has connectivity gaps, digital giants—mostly American—have started making significant investments in undersea data cables, data centers, and technological hubs. These investments are bridging the digital gaps in Africa, creating socio-economic benefits through increased access to digital services and internet resources.
With the current growth in revenue from global tech giants, we expect to see investments with the potential to improve connectivity across Africa massively. This is because evidence has over time, highlighted the wide-ranging positive correlation between revenue growth and investment in the African tech ecosystem.
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