Profits surge for US tech giants

The biggest tech giants in the world all recorded significant profits in the first three months of 2017, although Microsoft’s numbers were slightly below analysts expectations.

“While the lower than expected revenue growth will likely disappoint the market, longer-term, we believe that Microsoft is well positioned to transition its large enterprise installed base to its cloud services, given its scale, technical capabilities and expanding service offerings, which should in turn yield high profitable growth,” said Thomas Fitzgerald, associate fund manager at EdenTree Investment Management.

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Amazon’s profits surged by more that 40% to $724 million (£560.8 million), representing profit for the eighth quarter in a row. Amazon said its growth was underpinned by sales for web services and retail subscriptions, such as Amazon Prime.

In particular, Amazon’s expansion into India, Mexico and the UK was a significant factor in this especially successful quarter. Executives plan to further expand this reach with spending on content, products and warehouses for distribution.

However, Neil Saunders, managing director of GlobalData Retail said that “although Amazon’s sales advanced by a respectable 23% over the quarter, the pace of growth at the online behemoth remains much slower than it was over most of the prior fiscal year.”

“Some of this is the result of a less favourable exchange rate diluting contributions from the international business. However, some is also down to a more challenging demand environment in North America, which has limited spending uplifts on products within Amazon’s core territory.”

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The more mature Alphabet, Google’s parent company, increased 28% year-on-year to to $5.4 billion (£4.2 billion), a remarkable first 3 months for such a long established company. This was boosted by advertising on mobile phones and YouTube.

“Overall, the results reiterate Alphabet’s strong position within the online ecosystem. Today, Google Search, YouTube, Gmail, Google Maps and Google Play are each used by more than one billion users globally, providing the company with a vast level of reach, which advertisers and companies are increasingly using in order to deliver information to potential customers,” said Fitzgerald.

Microsoft also had a strong quarter, with profits up nearly 28%, but this was slightly under the estimations of some analysts who predicted profits would. Microsoft was lifted by its cloud computing products, like Azure, which represented $4.8 billion, up 28% compared with the previous year and it’s acquisition of LinkedIn, which it bought last year for $26 billion.

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“Our results this quarter reflect the trust customers are placing in the Microsoft Cloud,” said Microsoft chief executive Satya Nadella.

“From large multinationals to small and medium businesses to non-profits all over the world, organisations are using Microsoft’s cloud platforms to power their digital transformation.”

Chipmaker Intel’s profits rose 45% to $2.9 billion, with revenue up 8%. This growth was driven by the company’s memory division, which recently launched a new technology, accounting for a 55% increase in revenue.


Nominations are now open for the Tech Leaders Awards 2017, the UK’s flagship celebration of the business, IT and digital leaders driving disruptive innovation and demonstrating value from the application of technology in businesses and organisations. Nominating is free and simply: just click here to enter. Good luck!

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Nick Ismail

Nick Ismail is a former editor for Information Age (from 2018 to 2022) before moving on to become Global Head of Brand Journalism at HCLTech. He has a particular interest in smart technologies, AI and...

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