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Top tech companies show impressive growth



Top Wall Street analysts expect strong earnings results from the stocks of tech giants. Apple, Microsoft and Alphabet each reported impressively robust earnings results for the June quarter, demonstrating that these giant companies continue to go from strength to strength even as they face greater regulatory scrutiny. If there is any downside for the companies and their shareholders, it’s that the results will only concentrate critics’ minds about their sheer financial strength. A report shows Microsoft delivered its strongest revenue growth since 2008. Alphabet not only reported stunning revenue growth of 62%, it also kept expenses under control so well that its operating profit margin hit 31%, several percentage points above what Alphabet typically reports. Apple posted a 36% top line increase. Every part of its business expanded.



Apple aside, much of big tech’s surge is being driven by advertising. That was most obviously true at Alphabet—where its YouTube video ad revenue grew 84%—but even Microsoft benefited. The software giant posted 97% growth in its LinkedIn Marketing Solutions group and a stunning 53% jump in search advertising. That’s three times the March quarter growth in the search business. Alphabet’s operating profit margin nearly doubled to 31% from a year earlier, and up slightly from the first quarter. Since 2014, on an annual basis, the operating margin has ranged between 20% and 26%. The improvement was a result of Alphabet keeping a very tight lid on costs. But some of that might be related to a Covid-related slowdown in the costs of real estate expansion that may now be ending. At the same time, Azure, arguably now Microsoft’s most important business, in previous quarters has been reliably posting revenue growth of around 50%. Whereas, Microsoft’s free cash flow of $16.3 billion was about the same as Alphabet’s and just a little below App.