Deteriorating macroeconomic conditions since the beginning of the year have not spared the technology sector. In the second quarter, the industry’s giants each reported their lowest financial results in a year. As of 30 June, only Alphabet and Microsoft reported a 10% increase in annual revenues. Amazon remained below the 10% mark and Apple below 5%. For its part, Meta even recorded a loss of annual growth of -1%.

However, the reality was quite different for these companies at the beginning of 2021. Their financial results published at the end of the first quarter of 2021 showed an upward trend, due to the post-covid-19 recovery. According to figures by the Economist Intelligence Unit, Alphabet posted annual revenue growth of almost +35%, Amazon around +45%, Apple more than +50%, Meta just under +50% and Microsoft around +20%.

End of momentum

The contrast in the financial results of big tech between the first quarter of 2021 and the second quarter of 2022 shows that the boom caused by the post-pandemic recovery is well and truly in the past. The growth of the tech giants is slowing, but not declining--with the exception of Meta. Even if these companies still manage to find room for growth, the prospects of a shrinking global economy may well signal the end of momentum.

Paradoxically, remains one of the main risk factors for these companies. The EIU reported, for example, that Amazon generates around 40% of its revenues and Apple 60% outside the US. As a result, they have a high exposure to currency risks with major foreign currencies.

The rise of the dollar and the devaluation of the euro are not new. In the second quarter of this year, the impact of currency risk was between 3% and 4% on the revenues of the technology giants. However, the EIU expected the magnitude of the impact to rise to 6% or more in the third quarter.

Weak yen and pound

According to the EIU, the two companies most affected will be Apple and Meta, with the impact of currency risk affecting their revenues by up to 6%. However, the magnitude of the shock would be greater for Apple, which had only been impacted by -3% of its revenues in the second quarter. Meta, on the other hand, was already more severely affected with a -4% variation in revenues.

The EIU forecast that Amazon will be the tech giant least affected by the significant differences in the value of the main currencies against the dollar. The company only suffered a decline of around -3% in the second quarter and is only expected to suffer a further decline of up to -4% in the third quarter.

The decline of the euro against the dollar is a . However, the EIU pointed out that other currencies, such as the yen and the pound sterling, are also showing weakness. Weaknesses that are likely to persist in the medium term.

Originally published in French by and translated for Delano