Quite the Quarter: Big Tech Q2 Reports​

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By Curtley Bale​

The Story
Big Tech companies posted a stand-out quarter of financial results this week. Four of the largest tech companies, Alphabet, Amazon, Apple and Microsoft, are benefitting from the shift to home-working and tech-spending driven by the pandemic, as they generated a combined total of $302.5 billion in revenue during the second quarter (Q2).

This would suggest that neither the pandemic nor increasing regulatory scrutiny is thwarting the growth of the world’s biggest tech companies.

What It Means For Businesses And Law Firms
Apple beat expectations this quarter, generating $81.4bn in revenue, and avoiding any significant disruption caused by the recent global shortage of semi-conductor chips. Notably, iPhone sales were up 50% on the previous quarter and responsible for a large percentage of Apple's revenue.

Alphabet, the parent company of Google and YouTube, saw advertising sales soar 69% compared to Q2 in 2020. Online advertising became increasingly attractive for retailers throughout the Covid-19 pandemic, allowing tech companies to reap the benefits from the trend towards online working and e-commerce. Alphabet posted total revenues of $61.88 billion, with $50.4 billion coming from online advertising. In the face of worldwide criticism over corporate greed, Alphabet was keen to highlight the amount they paid YouTube content creators and Google advertisers (Alphabet CEO, Sundar Pichai). This decision reflects Alphabet’s increasing commitment to its public image and CSR duties, something which has been playing an increasing role in the decision-making processes of technology companies in light of intense scrutiny.

Microsoft saw the results of its cloud software battle with Amazon begin to take shape. The company's Azure Cloud system grew by 51% due to the increasing dependence on cloud computing software throughout the pandemic (Microsoft). Microsoft’s newest platform helped the company generate $46.2 billion in revenue during the quarter, with $19.5 billion coming from the cloud (FactSet). The company will continue to grow its new cloud software in the future, taking advantage of the continued shift to remote working.

Tech behemoth Amazon posted another set of mind-blowing results this quarter, generating a revenue of $113.1 billion. Amazon’s final quarter under the guidance of founder Bezos proved to be successful, as revenue was up 27% compared to last year (FactSet). Amazon’s cloud services, AWS, posted a second straight quarter of over 30% growth, as AWS revenue grew to $14.8 billion (Financial Times). Although Amazon’s cloud division generated less revenue than Microsoft’s new cloud platform, Amazon’s strategy of not relying on a single division has meant the company can generate enormous sums of revenue - in turn allowing it to invest in future research and development of new technology.

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