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Record profits for Apple, Microsoft and Google amid COVID-19 boost for Big Tech

Alphabet, Apple, Facebook, Amazon and Microsoft are all announcing quarterly financial results this week
Alphabet, Apple, Facebook, Amazon and Microsoft are all announcing quarterly financial results this week   -   Copyright  JUSTIN TALLIS/AFP
By Tom Bateman  & Reuters

Computing giants Apple and Microsoft, as well as Google parent company Alphabet announced their highest-ever quarterly profits on Tuesday, continuing a run that has seen Big Tech benefit from the shift online brought about by the COVID-19 pandemic.

Apple made a profit of $21.74 billion (€18.4 billion) as revenue for the second quarter of 2021 hit $81.43 billion (€68.95 billion), beating analysts' expectations.

Microsoft posted the most profitable quarter in the company's 46-year history, with revenues rising 21 per cent to $46.2 billion (€39.13 billion).

Google parent Alphabet made a profit of $18.5 billion (€15.66 billion), as advertising revenue from Google rose nearly 70 per cent during the quarter ending June 30.

The results follow record earnings for electric carmaker Tesla, announced on Monday. Fellow tech giants Facebook and Amazon will make their own announcements on Wednesday and Thursday.

Pandemic boost continues

A decline in Microsoft's PC and gaming sales linked to the global chip shortage was more than made up for by growth in its cloud computing businesses, which have been boosted by the pandemic-driven shift to remote working.

Sales figures for the company's Azure cloud computing service rose 51 per cent over the quarter, as revenue for Microsoft's so-called "Intelligent Cloud" segment rose 30 per cent overall.

Alphabet, too, benefited from the shift online. Advertising revenues from YouTube rose 83.7 per cent year-on-year, while Google's ad sales rose almost 70 per cent during the second quarter. Analysts said the growth in sales reflected the shift to online shopping, as the pandemic kept consumers at home.

"Alphabet has benefited from the general return of ad spend to the market and especially the balance of that return, which is more focused on digital channels than pre-pandemic," said Tom Johnson, chief digital officer at WPP Mindshare.

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The biggest tech firms have come under increased regulatory pressure from legislators in Europe and the USAP Photo

Consumer spending on home entertainment was a major factor in Apple's record profits, as revenue from the company's services business – which includes paid subscriptions for television and music as well as its App Store – hit a record high.

Apple executives warned that the pace of growth was not sustainable long-term, however.

"We expect still-significant growth in services but not to the level that we've seen in June," Apple Chief Financial Officer Luca Maestri told investors.

Chip shortage stunts growth

All three tech firms that announced their results on Tuesday were impacted by the global semiconductor shortage, which has impacted production of high-profile gadgets like Microsoft's Xbox Series X and S, and Apple's iPad.

Speaking to investors, Apple CEO Tim Cook said the chip shortage was likely to start impacting production of the iPhone as well.

"We do have some shortages where the demand has been so great and so beyond our own expectation that it's difficult to get the entire set of parts within the lead times that we try to get those," Cook said.

"OEM (original equipment manufacture) revenue declined 3 per cent and Surface declined 20 per cent," Microsoft Chief Financial Officer Amy Hood said, referring to production of Microsoft's own-brand devices.

"Both were impacted by the significant supply constraints noted earlier in a good demand environment," she added.