Q3 Movers and Shakers

It is earnings season, which means we're going to be recapping some of the results big tech has been posting this past week.

Big tech stocks were previously referred to as "FAANG," as in to signify Facebook, Apple, Amazon, Netflix, and Google, but Wall Street has changed its view on stocks to watch out for, so now they're referred to as The Magnificent Seven.

The Magnificent Seven stocks are: Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla, and Reuters has a nice report explaining how the term came to be and how the stocks have performed when compared to the rest of the S&P 500 (hint: they've outperformed the S&P 500 by a LOT).

Anyway, let's jump right into the mix!

Tesla

I touched on Tesla's results last week, but in case you missed it, the world's most valuable car company posted Q3 profit of $2.12 billion, up 17% from last year, while sales grew 8% when compared to the same period in 2023.

Investors were happy with the results, so much so that the company recorded its biggest single-day gain in over a decade.

Tesla ranked #8 on HackerNoon's tech company rankings this week.

Apple

The iPhone maker reported net sales of $94.9 billion for the fiscal quarter ending Sept. 28, up from $89.5 billion a year ago.

Despite the increase in revenue, profit was down to $14.74 billion from $23.0 billion in the same quarter of 2023. A quick look at the company's financial statement showed the company paid more in taxes this quarter than in the year-ago period.

The one question on Wall Street's mind after Apple reported its results was whether the company would be able to continue selling as much hardware as it currently does or whether growth will decline. The company did not address the question, per Reuters.

Instead, the company issued a modest outlook for sales for the last three months of 2024 — never a good sign considering businesses usually see sales boom during the holiday season.

Understandably, the company's stock price fell after the results were announced.

Apple occupied the #15 spot on HackerNoon's tech company rankings this week.

Microsoft

Microsoft said its revenue increased 16% year over year to $65.6 billion, while profit jumped 11% to $24.7 billion when compared to the same quarter of 2023.

Yet, the company's shares fell post earnings.

The main reason for the drop had to do with commentary surrounding artificial intelligence. Wall Street is concerned that big tech is spending way too much money on developing infrastructure for artificial intelligence, with no clear pathway on how these investments are going to be monetized.

While there is a general consensus that all these investments in AI will yield a return eventually, Wall Street is interested in a specific timeline as opposed to "some time in the future" rhetoric.

"Microsoft is escalating a CapEx war that it may not be able to win. That level of investment is very high, it created a very big drag on free cash flow and will create a very big drag on margins going forward," Gil Luria, head of technology research at D.A. Davidson, was quoted as saying by Reuters.

Microsoft ranked #3 on HackerNoon's tech company rankings this week.

Meta

As with Microsoft, Meta too reported an increase in its sales and profit but saw its shares drop post earnings.

The catalyst? Artificial intelligence.

Meta said its quarterly revenue rose 19% year over year to $40.6 billion, while profit increased 35% to $15.7 billion thanks to "AI progress across our apps and business."

Yet, Wall Street was concerned over comments the company's management made over an "acceleration" of artificial intelligence-related infrastructure expenses next year.

Meta's AI ambition is subject to more scrutiny than say some of the other Magnificent 7 stocks because the company has traditionally operated as a social media business. So anytime Meta tries to do something that's outside of its core activities, like, say, AI in this instance, Wall Street needs assurances that it will pan out.

As one analyst said: "Meta needs to prove that it can continue to cover its AI costs as they rise next year, and any weakness in its core ad business could make investors nervous as they continue to wait for a return on Meta’s bigger AI bets."

Meta landed on the #23 spot on HackerNoon's tech company rankings this week.

Amazon

Unlike some of the other Magnificent 7 stocks, Amazon's stock rallied after its earnings and rallied hard.

The company said its net sales increased by 11% year over year to $158.9 billion, while profit rose to  $15.3 billion from $9.9 billion in the same quarter of 2023.

The company's stock jumped for two reasons: first, the results were better than expected; and secondly, Amazon said it would make more money in the holiday quarter due to faster shipping times and a move to stock lower-costs items.

Essentially, Wall Street was happy that the company's core business was doing well and would continue to do so.

Amazon ranked #46 on HackerNoon's tech company rankings this week.

Alphabet

Google's parent Alphabet reported a 15% increase in quarterly revenue to $88.3 billion, while profit jumped 34% to $26.3 billion when compared to the same period a year ago.

Wall Street was not disappointed with the results, as evidenced by a rally in the company's stock post earnings.

During its Q3 earnings call, the company's management indicated it was seeing clear evidence that AI integrations across its products and services were driving new types of queries and creating incremental monetization opportunities.

One analyst said the commentary was "countering" the AI bear case on both search and higher infrastructure cost.

Alphabet ranked #4 on HackerNoon's tech company rankings this week.

Which leaves us with Nvidia. The world's most valuable chip maker is yet to report its results, but when it does, I'll be sure to report on it.

In Other News.. 📰

• Bitcoin Set for $6K-$8K Seesaw as U.S. Election Enters Final Stretch: Analyst — via CoinDesk
• ChatGPT Search is not OpenAI’s ‘Google killer’ yet — via TechCrunch
• Russia fines Google $20,000,000,000,000,000,000,000,000,000,000,000 — via CNN
• French families sue TikTok over alleged failure to remove harmful content — via Reuters
• What AI knows about you — via Axios
• Nvidia to join Dow Jones Industrial Average, replacing rival chipmaker Intel — via CNBC

And that's a wrap! Don't forget to share this newsletter with your family and friends! See y'all next week. PEACE! ☮️

— Sheharyar Khan, Editor, Business Tech @ HackerNoon

*All rankings are current as of Monday. To see how the rankings have changed, please visit HackerNoon's Tech Company Rankings page.

Tech, What the Heck!? is a once-weekly newsletter written by HackerNoon editors that combine HackerNoon's proprietary data with news-worthy tech stories from around the internet. Humorous and insightful, the newsletter recaps trending events that are shaping the world of tech. Subscribe here.