Mag 7 Results: Prime Performance for Amazon While Apple Not As Fruitful

This week five of the Mag 7 reported their financial results with a strong Alphabet (GOOG) report followed by less thrilling announcements by Microsoft (MSFT) and Meta (META). Most recent reports come from Amazon and Apple. Since their reports, Amazon is trading up 7% as Apple is trading down 1.5%.

Mighty Margins

Amazon’s (AMZN) Q3 results exceeded expectations, with revenue up 1% and operating income 18% above forecasts. The company raised guidance for Q4, noting margin expansion across all segments. Retail margin improvements stemmed from a better fulfillment cost structure, productivity gains in transportation, and extended server life estimates. AWS grew by 19.1%, slightly below expectations, though profits reached record levels. While facing some supply constraints, Amazon anticipates capacity improvements to boost growth. AWS’s AI segment is now at a multi-billion-dollar run rate, growing three times faster than AWS at a similar stage. Amazon also introduced new AI tools and observed positive trends in consumer behavior, with shoppers buying more essentials and opting for lower-priced items.

Mixed Signals

Apple’s (AAPL) fiscal Q4 results exceeded expectations, with revenue and EPS outperforming, led by a 2% beat in iPhone sales. However, Services revenue fell slightly short, while Mac, iPad, and Wearables also underperformed. The company’s December quarter revenue guidance, projecting low-to-mid single-digit growth, came in below the consensus for around 6.5% growth, raising concerns about hardware demand. Analysts also discussed whether AI feature rollouts would drive an iPhone upgrade cycle. On a positive note, Apple highlighted iOS 18.1’s rapid adoption, doubling that of iOS 17.1, with new features and integrations coming soon. Despite the Q4 Services miss, revenue reached a record high, with growth expected to continue in Q1, supported by a larger installed base and high user engagement.