The US market’s biggest tech stocks, Facebook Inc (NASDAQ:FB), Apple Inc (NASDAQ:AAPL), Amazon Inc (NASDAQ:AMZN) and Google parent Alphabet Inc (NASDAQ:GOOG), have seen their share prices soar as their simultaneous results topped expectations and defied predictions of a slowdown in demand during the pandemic.
Social media giant Facebook reported net income for the quarter of US$5.18bn, up from US$2.62bn a year ago, while revenues rose 11% to US$18.69bn, higher than analyst estimates of US$17.34bn.
Meanwhile, monthly active users, a core measure of the company’s growth and advertising base, grew to 2.7bn from 2.41bn last year while daily active users improved 12% to 1.79bn.
Apple, meanwhile, saw its numbers hit record highs with revenues of US$59.7bn, up from US$53.8bn in the prior year, while net income climbed to US$11.25bn from US$10.04bn, defying analyst estimates.
Apple saw its smartphone sales boosted by the launch of its iPhone SE in April, while US stimulus payments to citizens and the relaxation of lockdown measures over May and June also helped to drive performance. Sales of iPads and Macs also benefited from the shift towards home working, with the company saying the surge in demand had caused shortages of stock.
The strong performance helped offset weakness in the company’s wearables category and some negative weights on iPhone sales and its Apple Care insurance product.
Amazon similarly delivered a knockout set of quarterly numbers as huge demand from locked-down households and businesses during the pandemic continued to more than compensate for a doubling of investment in the business.
The online retailer behemoth also said it will invest more than US$10bn to build a network of 3,236 satellites to provide high-speed broadband internet services around the world, as part of boss Jeff Bezos's “Project Kuiper” plans.
Operating profits of US$5.8bn in the second quarter were up 89.5% on the same period last year, the biggest in the group's 26-year history.
Revenues rose 40% to US$88.9bn during a period when government lockdowns and non-essential restrictions were in force around the world.
Alphabet was the weakest among the four, however, the search engine owner still managed to hit Wall Street expectations for its second quarter with a net income of US$6.96bn, down from US$9.95bn a year ago, while revenues fell to US$31.6bn from US$31.7bn.
The number followed a dip in advertising revenues, which dropped by US$2.6bn year-on-year, although sales from its Google Cloud and YouTube businesses grew 43% to US$3bn and 6% to US$3.8bn respectively.
“With this unprecedented [coronavirus] pandemic causing a near-term consumer/enterprise spending abyss, the FAANG names have been viewed as relative safety blankets in this scary Category 5 storm”, said analysts at Wedbush.
“These tech behemoths are both defensive and offensive names for investors, as the re-rating for these secular growth stories continues to play out in the market with no signs of slowing down in our opinion”, they added.
The broker also said they believed the tech stocks “could still go another 20%-30% higher” looking ahead, particularly as “the transformational trends around cloud, e-commerce, 5G, and cyber security are still in the early innings of playing out with this [coronavirus] backdrop accelerating these growth stories by 18 to 24 months”.
Investors also seem unphased by recent political scrutiny of the tech giants by the US Congress, with all four of their CEOs, Mark Zuckerberg, Tim Cook, Jeff Bezos and Sundar Pichai all facing heated criticism over their business practices including allegations of anti-competitive acquisitions and using their market position to crush smaller rivals.
READ: Bosses of Facebook, Apple, Amazon and Google parent Alphabet blasted over market dominance in Congressional hearing ahead of results
Shares in Facebook were up 6.2% at US$249.10 in pre-market trading in New York on Friday, while Apple jumped 7.2% to US$412.63, Amazon climbed 6.2% to US$3,240.84 and Alphabet was flat at US$1,531.