Google, Meta, Apple CEOs walk recession tightrope

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The CEOs of several tech behemoths are seemingly walking a tightrope while a potential recession looms over the U.S. economy. 

On Thursday, the Commerce Department said its initial reading indicated GDP grew by 2.6% for the third quarter after two consecutive contractions, FOX Business reported. 

Some economists nonetheless have suggested the country could still experience a mild recession in the coming year.

Apple, Amazon, Google parent company Alphabet, Facebook parent company Meta Platforms and Microsoft all reported quarterly earnings this week. Some results disappointed investors, causing the stocks of some of them to tumble.

APPLE TOPS REVENUE ESTIMATES, MISSES ON IPHONE, IPAD NET SALES

TickerSecurityLastChangeChange %
AAPLAPPLE INC.155.73+10.93+7.55%
AMZNAMAZON.COM INC.102.74-8.22-7.41%
GOOGLALPHABET INC.96.45+4.23+4.59%
METAMETA PLATFORMS INC.99.12+1.18+1.20%
MSFTMICROSOFT CORP.235.91+9.16+4.04%

Here’s a look at what the CEOs have said that may give some insight into how coming months could be.

Apple

CEO Tim Cook acknowledged the "increasingly difficult economic environment" during the iPhone maker's earnings call Thursday.

Apple CEO Tim Cook speaks at the Anti-Defamation League’s “Never is Now” summit in New York City Dec. 3, 2018.  (REUTERS/Brendan McDermid / Reuters Photos)

Apple topped estimates on Q4 revenue and earnings per share (EPS) while its net sales for three main operating segments – iPhone, iPad and services – missed them. 

Cook said, however, overall iPhone demand was "strong and better than we anticipated" in the quarter, noting the company has had supply constraints for some iPhone 14 models.

Additionally, the CEO noted some areas where it was seeing inflation, including wages, logistics and certain silicon components.

"That's not an all-inclusive list of where we see it, but it gives you some ingredients of where we see inflation pressure," he told analysts.

The company did not provide revenue guidance for fiscal year 2023’s Q1, with the CFO citing near-term uncertainty in the world. Assuming the macroeconomic outlook and coronavirus-related impacts stay the same, Apple’s total revenue performance that quarter "will decelerate" year-over-year compared to Q4, according to the CFO.

Amazon, Apple, Meta and Alphabet are walking a tightrope with a looming recession. (Reuters / Reuters Photos)

Amazon

CEO Andy Jassy, who referenced "uncertain economic times" in a statement Thursday, indicated the company is working to lower costs.

Amazon is making "steady progress" on "lowering costs in our stores' fulfillment network" and has a "set of initiatives" that the company believes "will yield a stronger cost structure for the business moving forward," he said.

"There is obviously a lot happening in the macroeconomic environment, and we’ll balance our investments to be more streamlined without compromising our key long-term, strategic bets," Jassy added.

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Amazon said it expects fourth-quarter net sales to be in the $140-148 billion range, equating to between 2% and 8% growth year-over-year. That is lower than analyst estimates.

The company said it is taking belt-tightening steps such as pausing hiring in certain segments and shuttering some products and services amid moderating sales growth impacted by inflation and high energy costs. It expects impacts to continue into the fourth quarter.

Alphabet

Alphabet’s CEO, Sundar Pichai, described the "macro environment" as "challenging" and "clarifying" during a Q3 earnings call Tuesday.

"We have also started our work to drive efficiency by realigning resources to invest in our biggest growth opportunities," he said.

Google CEO Sundar Pichai speaks during a signing ceremony committing Google to help expand information technology education at El Centro College in Dallas, Texas, Oct. 3, 2019.  (REUTERS/Brandon Wade / Reuters Photos)

He also said headcount additions for Q4 will be "significantly lower," adding Alphabet will continue making "important trade-offs where needed" and be "focused on moderating operating expense growth" in 2023. The company plans to "moderate" hiring next year, according to Pichai.

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In a September meeting, he reportedly warned employees about the economy.

"I hope all of you are reading the news externally," he said, per The Street. "The fact that, you know, we are being a bit more responsible through one of the toughest macroeconomic conditions underway in the past decade, I think it’s important that, as a company, we pull together to get through moments like this."

Meta Platforms

CEO Mark Zuckerberg said Wednesday it was "not clear the economy has stabilized yet, so we’re planning our budget somewhat more conservatively."

Facebook CEO Mark Zuckerberg (Getty Images  |  iStock / Getty Images)

"In 2023, we’re going to focus our investments on a small number of high-priority growth areas," he said. "So that means some teams will grow meaningfully, but most other teams will stay flat or shrink over the next year."

META PLATFORMS MISSES ON EPS, SIGNALS BEARISH HIRING IN 2023

Meta, which beat estimates for revenue, matched them for monthly and daily active users and came in below for EPS, expects to "end 2023 as either roughly the same size or even a slightly smaller organization than we are today" in aggregate, per Zuckerberg.

The company's CFO also said it would be "making significant changes across the board to operate more efficiently."

Microsoft

Microsoft CEO Satya Nadella on Tuesday described principles guiding the company amid "changing economic times."

"First, we will invest behind categories that will drive the long-term secular trend where digital technology as a percentage of the world’s GDP will continue to increase," he said. "Second, we’ll prioritize helping our customers get the most value out of their digital spending, so that they can do more with less."

Nadella said Microsoft will be "disciplined in managing our cost structure." 

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Nadella, when asked by Yahoo Finance earlier this month about a potential recession, said he sees "constraints on the macro environment" that are leading companies to try to "do more with less."

"None of us are immune" to the macroeconomic headwinds, he said.
 

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